Sole trader, tax and VAT

machat

Hi,

I am a PAYE individual, who is also working a bit on the side to earn a few bob.

To get everything to grow (and hopefully become a full time self employed) I have registered my self as a sole trader for income tax, and registered for a company name with CRO.

Now, as far as I know, by regular PAYE income will run its own course, and I will only need to fill in the income that I earn ABOVE that. Is that correct ?

Secondly, as I run a marketing / consultancy, my income comes mostly from services and consultancy and most of my expenses come from purchases to support that.
Unfortunately, my turnover will be far below the VAT threshold, however, in order to claim the VAT back on my purchases will I not need to register regardless ?

barneystinson

machat wrote: »

Hi,

I am a PAYE individual, who is also working a bit on the side to earn a few bob.

To get everything to grow (and hopefully become a full time self employed) I have registered my self as a sole trader for income tax, and registered for a company name with CRO.

Now, as far as I know, by regular PAYE income will run its own course, and I will only need to fill in the income that I earn ABOVE that. Is that correct ?

Secondly, as I run a marketing / consultancy, my income comes mostly from services and consultancy and most of my expenses come from purchases to support that.
Unfortunately, my turnover will be far below the VAT threshold, however, in order to claim the VAT back on my purchases will I not need to register regardless ?

1. No, an income tax return is a return of your income and gains from all sources, including employment.

2. If you want to recover VAT on your inputs you need to register for VAT and charge it on your sales. This is of no consequence if your customers are themselves VAT registered and able to recover the VAT you charge them, otherwise it makes your service 23% more expensive to an unregistered person.

machat

Thank you for the answer.