A few quick tax questions

[delicious3141]

Hey guys, back again. Hoping I can answers to a few quick questions:

Q1. How much more difficult is it for somebody already in a full time job to start their own business and fill in their own tax return? Is it relatively easy or is it something you'd want an accountant for?

Q2. With the VAT threshold, does that apply to all of your income or just your business income? For example, my girlfriend will soon be on maternity leave and has a decent job with 30k a year salary. Suppose she wanted to try to start an eBay business during her leave, what would she need to consider? Is this allowed when you are on leave? Suppose theoretically somebody was to have a side business and it started doing well... would the VAT threshold apply to your salary income + your business income? For the 30k salary would it mean you could only turnover 47,000 from your business before having to register for VAT?

Q3. Kind of unrelated. I play online poker sometimes for fun. What's the tax situation with this? Somebody told me winnings were tax free. Is that correct? With my own business I am currently curbing growing it any further to keep it just below VAT threshold... would poker winnings affect this at all? If I was, theoretically, a winning player would this be a good way to make additional income without worrying about the complexities and diminishing returns of becoming VAT registered?

Thanks a lot.

 

[faradaykeynes]

1) Lot of people start part time business while in full time job and some manage to do their tax return online too some hire an accountant for it

2) Salary income does not count towards vat threshold, its ONLY UK turnover that count. If eBay business during her leave is the only business then 77k is threshold.

3) Poker is your personal thing nothing to do with business

 

[Bob]

Q3. Kind of unrelated. I play online poker sometimes for fun. What's the tax situation with this? Somebody told me winnings were tax free. Is that correct? With my own business I am currently curbing growing it any further to keep it just below VAT threshold... would poker winnings affect this at all? If I was, theoretically, a winning player would this be a good way to make additional income without worrying about the complexities and diminishing returns of becoming VAT registered?

Thanks a lot.

For HMRC opinion see here

 

[cheaper accountant]

You are right with gambling winnings, they are tax free.

 

[delicious3141]

1) Lot of people start part time business while in full time job and some manage to do their tax return online too some hire an accountant for it

2) Salary income does not count towards vat threshold, its ONLY UK turnover that count. If eBay business during her leave is the only business then 77k is threshold.

3) Poker is your personal thing nothing to do with business

Thanks a lot

The "ONLY UK" part got me thinking. I'm approaching the VAT threshold on my eBay business but maybe 10% of my sales are outside the UK. Are these not liable for VAT and if so to account for that would I need to keep much more detailed books to see what's selling where on every transaction? Paypal probably keep all the info but I haven't been storing it when I add up my turnover month to month.

 

[faradaykeynes]

paypal keep record but for short time, its better for you to keep copy of that record every month by exporting to excel, you can keep record of sales in UK and outside UK. Once your UK only turnover for last 12 months reach77k its time to register, if you anticipate it will hit soon the limit its better to register if you feel upwards trend in business

 

[Claire Dymond]

Just to add EEC sales to domestic customers also VATable.

 

[delicious3141]

Do paypal not store transactions indefinitely? I better start exporting then. Is there a feature in paypal to add up uk sales only?

Theoretically if I was near VAT threshold could I actually turn off sales domestically and only sell abroad and do that indefinitely? Is there a catch?

When I did self-assessment online this year I think the first question was "did you turnover more than 75,000 this year"? I hadn't so it didn't apply but what happens if you choose yes? Do you get more question regarding VAT? Do they then give you an opportunity to specify that it's less than 75,000 DOMESTICALLY?

Just to add EEC sales to domestic customers also VATable.

What are EEC sales?

 

[Figurate]

Do paypal not store transactions indefinitely? I better start exporting then. Is there a feature in paypal to add up uk sales only?

Theoretically if I was near VAT threshold could I actually turn off sales domestically and only sell abroad and do that indefinitely? Is there a catch?

When I did self-assessment online this year I think the first question was "did you turnover more than 75,000 this year"? I hadn't so it didn't apply but what happens if you choose yes? Do you get more question regarding VAT? Do they then give you an opportunity to specify that it's less than 75,000 DOMESTICALLY?


What are EEC sales?

EEC sales - Sales to the European Community.

If your turnover is above the VAT threshold, you have to provide more detailed accounts in your tax return (as opposed to a basic three line format)

If you distance sell to the EC, you need to be aware of the distance selling thresholds - each country has their own threshold... for example, Germany's is 10000 euros but Ireland's is 41000 euros
http://ec.europa.eu/taxation_custom...at/traders/vat_community/vat_in_ec_annexi.pdf