Tradesman vat question. Earnings and 2/3rd rule VAT

2024

Left school at 14/15 with no qualifications and I've been trading as a sole trader for nearly 30 years with a break of 4-5 years during the bad years after the crash! I have always worked on the supplying labor only and never went over the threshold and having to charge VAT. I come from a large family of different trades and ive worked with them all during this time picking up all different skills. for the past 10 years i've been out doing all my own jobs either plastering, bathroom refits/tiling, block laying, stonework and concreting to name a few. Kind of a multi trader now rather than just one trade.

I would also build small extensions and garages on my own or would pull in some help with small laboring jobs but next year i can see this throwing me over the threshold and having to charge VAT. The extensions and garages have also been labor only.

I'm registered as a sole trader tradesman although i'm now thinking of registering as a ltd if this will help with VAT rates or tax liabilities.

For now i know that i can earn upto 37500e before i have to charge VAT. If i do go over the threshold, what is the next tax brackets for my earnings while i am charging VAT. Its been mentioned to me there is a 2/3rds rule on vat thatll help keep the rate of VAT to 13.5% for labor and materials.

Im still in the infancy for understanding how to charge VAT to my future invoices. Is there any web pages or books where i can get this info i need to learn how to do this. Below i have wrote a few examples of how i think it i should add it to my invoices.

Example1.

Stone on front of house and wall.

labor 7000e stone 4500e total invoice 11500 plus 13.5% vat =13052.5 (vat 1552.5) Materials is less than 2/3rds of total invoice here.

stone cost 4000e profit of 500e. clients supplied sand and cement.

example 2.

Bathroom refit

Labor 2000 materials 4500 total invoice 6500 plus 23% vat = 7995e ( vat 1495) Materials is more than 2/3rds of total invoice here.

Materials all cost 4500 including 23% vat. No profit on materials.

example 3.

Block wall labor only 300e plus 23% vat = 3690 (vat 690e)

2024

What i forgot to ask in the next question on my OP was my income tax rates. What i understand is that if i go over 40k earnings then ill get taxed at the higher rate of 40%. For example, if i earn 50k in one year, do i get taxed at 40% for the full 50k or would it be 20% upto 40k then the remaining 10k be taxed at 40% higher tax rate.

listermint

Get an accountant you can work with. Having your accounts handled in a reasonable manner will allow you to concentrate on the monetary coming in.

HollyG17

Threshold is €75k if 90% of turnover relates to services.

You should receive your tax credit cert from Revenue shortly which sets outs your credits, thresholds etc. So for eg. If your threshold is €40,000 you pay up to €40,000 at the lower tax rate (20%) and anything above that is charged at higher tax rate. Tax credits are then deducted from your tax payable and you pay this balance to Revenue. HTH and hope I haven’t confused the issue more.

2024

https://www.boards.ie/discussion/comment/121545520#Comment_121545520

I do have an accountant, hes away all of Jan on holiday. I will take this up with him when hes back. I was just hoping for some info in the meantime while i have my own free time.

2024

https://www.boards.ie/discussion/comment/121545786#Comment_121545786

I havent regiesterd for VAT yet. For now im still on the 20% income tax along with the prsi and usc rates.

Is the 75k threshold you mention for all labor and materials or is that 75k income im allowed before another tax hike.

scwazrh

My advice , stay as sole trader and register for vat .Get a good accountant and that won’t necessarily be cheap.Dont break your invoices down for customer as labour and materials ,Just an outline of the work competed and amount due .Always charge 13.5% , no benefit to you to charge 23%

2024

https://www.boards.ie/discussion/comment/121558998#Comment_121558998

I have an accountant. As mentioned, won't be seeing him until mid February..

Reason I never registered for vat before because it was always a hindrance. No one ever wanted to pay the vat ontop of labor so was always going to lose the work. No one likes paying an extra 13.5% or 23% on top of what they are already spending when they can get a non vat registered tradesmen to do it. The vat threshold here in Ireland is a disgrace if you ask me. In the UK it's something like 80k sterling. Even if it was 60-70k euros here in Ireland I'd think the government would get more in the way of taxes than others doing cash jobs. It's a no brainer to raise it for tradesmen tbh.

Curious to know why you say there's no benefit to charging 23%. Any samples of breakdowns do I can see what you mean.

Even my own samples above if they could be explained to me.