VAT payable on chair rental?

[Milliemakeup]

Hi,

I am aware the law has changed.

All my stylists are self employed with their own tills, card machines, diary etc. I invoice them for 50% at the end of every week.

I am soon to be VAT registered. Will I just pay it or will the stylists have to also?

Many thanks,
Millie

 

[LAPirate]

Hi,

I am aware the law has changed.

All my stylists are self employed with their own tills, card machines, diary etc. I invoice them for 50% at the end of every week.

I am soon to be VAT registered. Will I just pay it or will the stylists have to also?

Many thanks,
Millie

If you are invoicing them you will have to charge vat on their commision.... It's up to you wether you feel you are going to absorb this or pass on some of it to your self employed staff. As they take their own monies you only have to account for vat in your share.. ;-)

 

[BannerPenguin]

Hiya,

As above. You would need to charge VAT.
I think you would need to charge it extra rather than absorb it yourself because for example invoice them at £500 + VAT = £600 total. Means the renters may feel a bit annoyed having to pay an extra £100 which if there not VAT registered is thrown away.

If you charge it I would make suggestion for all the others to register so they cab reclaim it back.

 

[LAPirate]

Hiya,

As above. You would need to charge VAT.
I think you would need to charge it extra rather than absorb it yourself because for example invoice them at £500 + VAT = £600 total. Means the renters may feel a bit annoyed having to pay an extra £100 which if there not VAT registered is thrown away.

If you charge it I would make suggestion for all the others to register so they cab reclaim it back.

It's highly unlikely that the individual stylists would be taking enough to to be vat registered... You could increase your prices and perhaps slightly lower your percentage to offset the vat.

 

[BannerPenguin]

They can register voluntarily and there is no minimum limit they need to be earning.

It's highly unlikely that the individual stylists would be taking enough to to be vat registered... You could increase your prices and perhaps slightly lower your percentage to offset the vat.

 

[LAPirate]

They can register voluntarily and there is no minimum limit they need to be earning.

This would change the tge treatment for VAT. If the stylist is vat registered then VAT will be due on the whole service charge... Meaning the stylist would still be worse off as they would have to pay the difference on the vat of the whole amount and the vat they pay on the owners 50%

 

[BannerPenguin]

Got ya, I wasn't sure if/if any treatments etc. are VATable. So yeah either way it's going to be a bit of pain and the OP may have to take the hit herself a little financially. Thanks for info

This would change the tge treatment for VAT. If the stylist is vat registered then VAT will be due on the whole service charge... Meaning the stylist would still be worse off as they would have to pay the difference on the vat of the whole amount and the vat they pay on the owners 50%

 

[jmd1980]

Just my view.....

VAT is a tax on turnover, the threshold is currently £79k pa. As the stylists are extremely unlikely to make this I can't imagine them needing to register. They are self employed - their VAT and tax arrangements are their own affair, you do not have to do anything in regards to their registration.

However, if you are to register for VAT, you will be liable to pay 20% of your turnover provided it reaches threshold. Remember that VAT you pay on your turnover may be offset against VAT you have been charged by suppliers etc.

It is a difficult one whether to pass this onto the self employed stylists. You would have to charge them an extra 10% to cover the VAT, making your cut 60% of their takings and that would not be acceptable to me in that situation.

You should talk to your accountant who might be able to give you an idea of your likely VAT bill once offsetting has been worked out??

J

 

[Male Waxing]

I’m sure that there are ways around this like setting up a new company that collects the percentage for you. You need to speak to a good advisor.