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Taking VAT off commission earns?

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Snuggles

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Need some help from the geeks on here with a more business head than me...

If you work self employed on a commission basis can the (employer) owner of the salon take the VAT of your %

For example say you get 40% commission on every treatment you do, is it right that the owner deducts VAT off your 40%


Don't really know how it works, never come across this before
 

Kate1982

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Not because it is not her business. If the salon owners business is VAT registered she pays the VAT not you.
 

sarahlou06

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I'm glad this has come up & don't mean to interrupt but my friend is a hair dresser (self employed) she takes a percentage of what she makes.
The salon owner also deducts VAT from this.
Surely she sorts her own vat out?
 

Snuggles

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Basically I'm working in a salon where I get 40% commission of every treatment I do. I am not VAT registered but salon is.
At the end of the week when wages are being handed out they deduct the vat off my 40%??

Doesn't sound right to me?
 

sarahlou06

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Nor me & this is what my friend & I have been discussing.

I always thought if your self employed you sort your own vat out.

Hmmmmm I suppose the best thing to do would be to ring brmc. There always really helpful
 

sarahlou06

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Kate1982

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I am confused. Are you employed or SE?
A SE person does not get given a wage. The money you take is yours and you give her the rent or %. Therefore at the end of the week you should be giving her the 60%.
 

LAPirate

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Need some help from the geeks on here with a more business head than me...

If you work self employed on a commission basis can the (employer) owner of the salon take the VAT of your %

For example say you get 40% commission on every treatment you do, is it right that the owner deducts VAT off your 40%


Don't really know how it works, never come across this before
Are you really properly self employed are are you a commision only employee? Do you take your own bills separately? Do you use salon cards machine? Can you make a physical loss or do you just earn nothing on a bad week? If the salon is VAT registered and they take all the bills then VAT will be deducted off your weekly total before it is split.
 

Snuggles

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I'm self employed. All money goes through the salons tills and I'm paid my 40%-vat at the end of the week.

They are in charge of bookings and supplying product, I turn up do treatments, get my money at end of week. I pay my own tax and national insurance
 

LAPirate

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I'm self employed. All money goes through the salons tills and I'm paid my 40%-vat at the end of the week.

They are in charge of bookings and supplying product, I turn up do treatments, get my money at end of week. I pay my own tax and national insurance
In my opinion you are strictly speaking not truly self employyed you are a commision only employee. The salon will remove the vat from your take
Before splitting! You would need to be paying rent etc when on holiday, have your own insurance, take your own moneys to be not liable for the Vat! If the salon is VAT registered then that are taking VAT on every treatment.
 

Snuggles

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Are you really properly self employed are are you a commision only employee? Do you take your own bills separately? Do you use salon cards machine? Can you make a physical loss or do you just earn nothing on a bad week? If the salon is VAT registered and they take all the bills then VAT will be deducted off your weekly total before it is split.
Thanks for clarifying this for me, never come across this before, however the salons I worked in previously may not have been VAT registered.

X
 

LAPirate

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Thanks for clarifying this for me, never come across this before, however the salons I worked in previously may not have been VAT registered.

X
I'm not sure of all specifics! There were new VAT rulings in the last budget aimed at tightening these areas. There are ways around it, however a salon probably wouldn't want to
Make a complicated change to its accounting for fear of upsetting the CATMAN!!
 

sarahlou06

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Do you get holiday pay?
 

Kate1982

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So basically you are giving the salon 80% of your takings?
There is no rule stating what the salon can ask of you but it shouldn't be broken down as 60% + Vat.
I would speak to the salon owner 1st. That is a verysteep cost.
 

LAPirate

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I'm not sure of all specifics! There were new VAT rulings in the last budget aimed at tightening these areas. There are ways around it, however a salon probably wouldn't want to
Make a complicated change to its accounting for fear of upsetting the CATMAN!!
Oops
VATMAN
 

LAPirate

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So basically you are giving the salon 80% of your takings?
There is no rule stating what the salon can ask of you but it shouldn't be broken down as 60% + Vat.
I would speak to the salon owner 1st. That is a verysteep cost.
Not quite!! About 66%! It means your getting approx 33% of your gross take or 40% net take
 

pkenzie

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Unfortunately yes this is allowed. I am in the same position i am self eployes so i pay my own ni and tax. But i get vat taken off the treatment price before i get my 50%. The govt. Dont care how the companys pay their vat as long as it gets payed. So although you dont earn enough to pay vat the company does and u are part of the company. X

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sarahlou06

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Dumb question here can someone kindly tell me the differences between vat & tax when it comes to being self employed?
 

Divine h & b

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Because the salon is vat registered 20% of the price they charge is the vat and not actually theirs it's the governments! Which is why they take it off you! Had they not been vat registered their prices would be 20% lower.
 

Amore Hair

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I think alot of people get confused with the whole VAT And tax thing, i know i do. Im ging self employed at the start of May, but my partner has been self employed since....e.rm a long time!! I do his tax return every april as its simple, hes subcontracted so his tax is paid already bu the contractors i simplly fill in What he brought home and what he has had deducted.

On teh odd occasion there have been epenses, new tools, or work wear and he gets confused, remembr we can claim the vat back on that.....No we cant love, you dont eran enough to be vat registered, we put it down as an expense which you have paid for for work purposes and it comes out of your profi meaning that you have paid to much tax on your yearly earnings!!

At least this is how i think it works...... For example, i but a large Shampoo from sallys, i cant get the tax back but i can ut it dwn in my expenses......

Please some one help!! just clarify i am on the right track, its super important i undrstnad before may!!
 

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