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    Does postage count towards VAT taxable turnover?

    My turnover is getting close to the VAT threshold for the first time but I’m not clear if postage charges count towards my VAT taxable turnover.
    I’m selling goods online and use Royal Mail and ParcelForce for shipping
    I’ve tried phoning Customs and Excise but they are always busy and don’t allow you to hold so while I wait for them to reply to an email does anybody that is VAT registered know the answer?

    13 Comments

    I would say yes but I don't think there's vat on standard postage (maybe couriers?) so you would have to take that into your calculation for how much you'd need to charge and whether you'd be better off as I think you'd have to charge vat on postage but not be able to claim it back so you'd lose out on that being vat registered I think??

    Its a cost of sale, and does count as part of your turnover. Try rining your local tax office rather than the official phone line, they are very helpful these days.

    TBH if you buy lots in every month its worth being VAT registered,I am VAT registered but on the flat rate scheme as my running costs are minimal and I purchase very little for the business over the month.

    Banned

    what are the advantages of the flat rate scheme?

    colinsunderland

    what are the advantages of the flat rate scheme?



    pay less vat!


    colinsunderland

    what are the advantages of the flat rate scheme?

    colinsunderland

    what are the advantages of the flat rate scheme?



    Not necessarily. The flat rates for your industry may be in excess of the actual VAT you pay with each return. The real advantage is not having to manually prepare your VAT return.

    BFN,

    fp.

    Benjimoron

    I would say yes but I don't think there's vat on standard postage (maybe … I would say yes but I don't think there's vat on standard postage (maybe couriers?) so you would have to take that into your calculation for how much you'd need to charge and whether you'd be better off as I think you'd have to charge vat on postage but not be able to claim it back so you'd lose out on that being vat registered I think??



    Yes, no VAT on standard Royal Mail postal fees.
    Couriers sometimes charge VAT (it depends if they are VAT registered) or on the service(s) they offer.

    It may be worth going through some previous invoices to see if the usual organisations you use charge VAT or not.

    BFN,

    fp.

    Flat rate for me. Invoice at 17.5% but only pay HMRC 10.5%

    Original Poster

    Thanks for the replies.

    Banned

    chester123

    Flat rate for me. Invoice at 17.5% but only pay HMRC 10.5%



    you can't claim the vat back on puchases though can you?

    the 7% VAT that chester123 doesn't pay over to HMRC is their 'vat back on purchases'. best to calculate a couple of periods to see if you are better off on standard or flat rate scheme.

    you can claim input tax on high value capital items (over £2k incuding VAT)

    From HMRC Notice 733

    15.2 Reclaim of VAT on capital expenditure goods

    If you use the flat rate scheme, you can reclaim the VAT you have been charged on a single purchase of capital expenditure goods where the amount of the purchase, including VAT, is £2,000 or more.

    You deal with these capital expenditure goods outside the flat rate scheme. This means that you claim the input tax in box 4 of your VAT return.

    If the supply is:

    * more than one purchase
    * under £2,000 including VAT or
    * of services

    then no VAT is claimable, as this input tax is already taken into account in the calculation of your flat rate percentage.



    My flat rate is 13% but still benefit enough for me to continue on scheme
    Edited by: "bug199" 28th Jul 2010

    colinsunderland

    you can't claim the vat back on puchases though can you?



    No but there is a finite amount you can claim. It's not like you buy a new pc etc... every month.

    fanpages

    BFN,fp.



    There is that.

    It all depends on what you do, some would be able to save a fair bit using that method whereas others it would cost money. Depends if you're buying and selling or mainly offering a service.
    Edited by: "Benjimoron" 28th Jul 2010
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