Soffit downlighters

[JohnW2]

That I don't know. But the only reasons for not registering for VAT I can think of are fraudulent.

In the context of what was being discussed, the turnover: profit ratio (which has been asked about) becomes a bit of a vicious circle, since it will inevitably depend crucially on whether or not the electrician provides materials as well as his/her labour. If they do not provide materials, and particularly if they have only modest overheads, then their profit:turnover ratio (the inverse of what has been mentioned) could be very high, and very much higher than if their turnover included material costs.

Kind Regards, John

 

[EFLImpudence]

Surely profit has nothing to do with it.

The VAT registration threshold is dependent on turnover (of taxable supplies).

 

[ban-all-sheds]

And I should have worded it better. Even if you are over the threshold, your reasons for not registering could be perfectly genuine, even though unlawful. After all, even an armed robber has genuine reasons for wanting to make off with bagfuls of cash.

What I meant was that as you near the threshold, you might have genuine reasons to want to do everything you could to stay below it, and if what you do is lawful, then why not? It's tax avoidance, not evasion, and it's hardly aggressive.

I'm just curious to know how much of a "living" the average electrician would make if his turnover was below the line.

 

[JohnW2]

Surely profit has nothing to do with it. The VAT registration threshold is dependent on turnover (of taxable supplies).

Indeed - but I suspect that BAS was probably thinking that an electrician's profit would be inadequate as "an acceptable income" if his/her turnover was less than the VAT registration threshold.

Whilst (depending on what one regards as 'acceptable') that might be true of an electrician who supplies materials, it probably would not be true of one who never supplied materials and who had only modest overheads - since their gross income would then be a substantial proportion of anything up to £85k.

Kind Regards, John

 

[EFLImpudence]

I must have inhabited a different very poor world.

£83,000 / 50 weeks = £1660 per week average.

 

[JohnW2]

I must have inhabited a different very poor world. £83,000 / 50 weeks = £1660 per week average.

Exactly. However, that's assuming £83k profit. More realistically, for someone not providing materials, lets allow them £20k overheads - so profit would be £63k, about £1,260 per week.

However, if the electrician were supplying materials which, say, represented £30k of their turnover, then their profit (from an £83k turnover, with £20k overheads), hence gross income, would become around £33k, about £660 per week. Knock off the NI and income tax, and that's hardly a millionaire's 'in pocket' income!

Kind Regards, John

 

[EFLImpudence]

You can play with the numbers but I think a sole trader with a turnover of £82,999 would be quite happy in most areas (of work and the country).

If not earning a millionaire's 'in pocket' income then £30k (£600 per week) materials and £20k (£400) overheads would in my view be unrealistic.

 

[JohnW2]

You can play with the numbers but I think a sole trader with a turnover of £82,999 would be quite happy in most areas (of work and the country). If not earning a millionaires 'in pocket' income then £30k (£600 per week) materials and £20k (£400) overheads would in my view be unrealistic.

Fair enough. As you know, I'm no electrician, so I was just pulling figures out of the air.

What would you say would be realistic figure estimates for materials and overheads for a sole-trader electrician with a total turnover (materials+labour) of £83k?

Kind Regards, John

 

[EFLImpudence]

I don't know, I never earned that much.

 

[JohnW2]

I don't know, I never earned that much.

Fair enough - so roughly what proportion of your total turnover (whatever it was, materials + labour) do you think was attributable to materials?

As for overheads, I would imagine that most were largely 'fixed' (i.e. not very dependent on turnover) - so what do you think yours were, for things like Scheme subscriptions, insurances, vehicle depreciation/tax/insurance/maintenance/fuel, tool/testgear depreciation/maintenance etc., etc.?

Kind Regards, John

 

[EddieM]

Exactly. However, that's assuming £83k profit. More realistically, for someone not providing materials, lets allow them £20k overheads - so profit would be £63k, about £1,260 per week.

However, if the electrician were supplying materials which, say, represented £30k of their turnover, then their profit (from an £83k turnover, with £20k overheads), hence gross income, would become around £33k, about £660 per week. Knock off the NI and income tax, and that's hardly a millionaire's 'in pocket' income!

Kind Regards, John

I may well be misunderstanding your point here, but from what I can gather from your post, it doesn't work like that. Overheads are of no consideration, when assessing VAT liability. It is simply a balance of sales vs purchases ?? confused.

 

[JohnW2]

I may well be misunderstanding your point here, but from what I can gather from your post, it doesn't work like that. Overheads are of no consideration, when assessing VAT liability. It is simply a balance of sales vs purchases ?? confused.

I realise that. We're talking about the profit (i.e. gross income) that would be made by someone whose turnover ("sales"=materials+labour, if materials are being provided) was just below the VAT registration threshold. That profit would be equal to turnover (sales) minus material costs minus overheads.

For someone who was not supplying materials but still had a turnover just below the VAT registration thershold, that profit would just be turnover (sales) minus overheads, hence appreciably greater.

Kind Regards, John

 

[EFLImpudence]

Fair enough - so roughly what proportion of your total turnover (whatever it was, materials + labour) do you think was attributable to materials?

As for overheads, I would imagine that most were largely 'fixed' (i.e. not very dependent on turnover) - so what do you think yours were, for things like Scheme subscriptions, insurances, vehicle depreciation/tax/insurance/maintenance/fuel, tool/testgear depreciation/maintenance etc., etc.?

I'm afraid I may not be typical.
I've never been that keen on work; do enough to pay the bills and have the rest of the week off.


Scheme - 450
Business insurance - 70
Van insurance - 300
Fuel - 1000
Vehicle depreciation - don't believe in it - (van cost 260)
VED - can't remember? - 140?
Maintenance inc MoT - negligible, do it myself - 300 parts.
Tools - always had lots -
Test gear - told you before, bought two 1652s for 130 and sold one for 130
Other test gear - 200
Calibration - 30

2500 - Double that if you want for forgotten things.

What value for materials?
Repairs don't need many.
Cable, accessories, occasional CU.

 

[JohnW2]

I'm afraid I may not be typical. I've never been that keen on work; do enough to pay the bills and have the rest of the week off.

I may have asked the wrong person ...

Fuel - 1000
Vehicle depreciation - don't believe in it - (van cost 260)
Maintenance inc MoT - negligible, do it myself - 300 parts.
Tools - always had lots -
Test gear - told you before, bought two 1652s for 130 and sold one for 130

Hmmm. I think I've definitely asked the wrong person! Can any other electricians perhaps give me a more typical idea of their overheads, and also what proportion of their sales (total billing, for materials and labour) is attributable to materials?

Kind Regards, John

 

[EddieM]

I realise that. We're talking about the profit (i.e. gross income) that would be made by someone whose turnover ("sales"=materials+labour, if materials are being provided) was just below the VAT registration threshold. That profit would be equal to turnover (sales) minus material costs minus overheads.

For someone who was not supplying materials but still had a turnover just below the VAT registration thershold, that profit would just be turnover (sales) minus overheads, hence appreciably greater.

Kind Regards, John

I still confess I don't understand, your overheads are purchases.