Are expenses net or gross of VAT if you're VAT registered?

[jonathan2141]

Sorry for the basic question. But are expenses you claim back for your business, net or gross of VAT if you're VAT registered?

Thanks
Jon

 

[David Griffiths]

For normal VAT schemes, both sales and purchases are shown net of VAT.

For a flat rate scheme it's normal to show gross sales less the actual VAT paid, and to show expenses including VAT, but some systems do show it differently.

 

[jonathan2141]

Ahh ok. So if I say, buy a keyboard for my office for £12 inc VAT, do I put £10 through as expenses against my earnings, and claim back the £2 VAT?

Or do I put through £12 against my earnings and claim back £2 VAT?

Thanks

 

[David Griffiths]

The expense is £10 and you recover the £2

 

[jonathan2141]

this is as a sole trader

 

[David Griffiths]

It's the same for every type of business

 

[jonathan2141]

Also I've another quick question if you have a minute please. If I buy a car, use it 50% for business and choose the 'actual cost method', what happens about VAT on the sale price of the car if I'm VAT registered? Would I have to add 20%?

If I choose the 'mileage method', is the car entirely outside of the business, so no VAT would be due on its sale?

Thanks a lot

 

[David Griffiths]

You can only use the mileage method if your turnover is below the VAT registration threshold at the time that you bring the car into the business.

The status of the car is not affected by which method you choose - actual or mileage. You cannot claim input tax on the purchase. When you sell it, there is no output tax due, unless you get more than you paid for it. In that case you pay VAT on the profit, or margin, that you made

 

[jonathan2141]

Thanks a lot for this David, would you be able to answer another few quick questions please?

1) I voluntarily registered for VAT, my car was bought before I registered and I'm yet to choose which method. My turnover is below the threshold, am I ok to do the 'mileage method"?

2) Can I claim input tax on any services, fuel etc at 50% because it's 50% for business use?

3) So I can't claim input tax on the purchase price of the car, but can I claim capital allowance of 25% per year for the car, of the 50% used for business use?

Thanks
Jon

 

[Scalloway]

You can claim 45p per mile. If you do that you can't claim anything else.