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bigduckontax, Accountant
Category: Tax
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Im looking to start up a business and hope you can help. My store will be a Uk o

Resolved Question:

Hello im looking to start up a business and hope you can help.
My store will be a Uk online, retail business
Products will be shipped direct from China to world wide destinations
What vat do I charge my customers?
What tax do I have to take into consideration?
Sole trader or limited?
What tax can I claim back?
How do I file end of year tax reports?
Are there any guides you recommend?
is there any information I have forgotten about?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. You do not need to worry about VAT until your turnover in a year exceeds or approaches 83K. If you operate as a sole trader then you will have to register as such with HMRC. They will then send you a self assessment tax return form to fill in annually after the end of each tax year [5 April]. On receipt of the self assessment HMRC will notify you of any Income Tax (IT) and National Insurance (NI) due. If you operate as a limited company then the 's profits will be subject to Corporation Tax (CT). Returns for CT have to be made on line. If you pay yourself from the company this must be through PAYE using RTI so the company will have to be registered for PAYE. If you use a company you place a buffer between yourself and the company as it is the company which is trading not you. If the company is registered for VAT then any input tax incurred can be reclaimed quarterly. You make these returns on line. Please do not hesitate to come back to me on this thread if you need more information. I do hope that you have found my reply of assistance.
Customer: replied 1 year ago.
Hello Keith, thanks for the reply, I don't think I will be meeting the 83k threshold.Therefore would you suggest it would be more effective to be a sole trader?And I am confused to regarding what sales tax needs to be applied to my sales? As I will be shipping clothing direct from China worldwide.Thanks Josh
Expert:  bigduckontax replied 1 year ago.
No sales tax Josh; the UK does have one, it is called VAT! As you say you will be outside its parameters. The great advantage of using a limited company is that it would be separate legal entity from yourself and should something go disastrously wrong it is the company which carries the can, not you. China does have a tax on exports, but China Briefing, Dezan Shira and Associates advise: 'Export duties are only imposed on a few resource products and semi-manufactured goods. In 2013, China continues to levy temporary tariffs on exports including coal, crude oil, chemical fertilizers and iron alloy to conserve resources.' I suspect that you will not be trading in these commodities. There is a very good summary of the Chinese tax position here [same source]: http://www.china-briefing.com/news/2013/03/11/import-export-taxes-and-duties-in-china.html Please be so kind as to rate me before you leave the Just Answer site.
Customer: replied 1 year ago.
Thanks Keith.So for example if I sold a £40 pound dress shipped direct from China to America. Would I apply any tax?Also if i shipped from China to UK would I apply any tax?If there are no sales tax where and what tax would I be paying as a sole trader. Thanks
Expert:  bigduckontax replied 1 year ago.
It would appear not, even were you registered for VAT and shipped to the States it would be an export, a zero rated supply, where you apply VAT, but at 0%. If you shipped from China to the UK Customs would, but they might not, apply import duties and VAT also. The import duties would form part of your cost of sale as would the VAT were you not registered. If you were registered then the VAT imposed by Customs would be a input, reclaimable, but you would have to charge your customer VAT on the selling price. Not being registered for VAT makes life much simpler. As a sole trader you would be subject to IT on your profits as I explained in my original answer. You would have to register with HMRC as self employed. Please don't forget my rating.
Customer: replied 1 year ago.
So the government would tax me on income tax and national insurance.Do you know if there is a tax chart for the income tax and nation insurance. As this would help me split the tax from the profitsYou have been very helpful.
Expert:  bigduckontax replied 1 year ago.
Here: https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2016-17/tax-and-tax-credit-rates-and-thresholds-for-2016-17
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Expert:  bigduckontax replied 1 year ago.
Thank you for your excellent support.