Price per word... +VAT?
Thread poster: jssnowden

jssnowden  Identity Verified
United Kingdom
Local time: 18:05
French to English
+ ...
Dec 13, 2015

Hi all,

Please excuse the ignorance, I am only starting out in the freelance tax world now and it's, as I'm sure you'll all be aware, not the easiest thing to decipher.

My question to you all is when I quote on a £0.## per word price, should I then provide a VAT figure on top of that?

I.e. 3,000 words @ £0.06 = £180 + VAT @20% = £216

Or should I take the VAT into account in the price per word?


As I say, a daft question, but one that I hope you will all agree is quite a fundamental one and useful for any future début freelancers to refer to (I had a nightmare trawling the VAT forum posts).


Many thanks,
Jonny


Direct link Reply with quote
 

Andrea Halbritter  Identity Verified
France
Local time: 19:05
Member (2014)
French to German
+ ...
Without Dec 13, 2015

Hi!

You provide a word price without VAT as you will not need to charge VAT for every customer depending on in which country you are and in which country your customer is. There are also freelancers who never have to charge VAT, in France e. g. the autoentrepreneurs.

I do tell customers though when I will have to charge VAT. The word price is without though.

Hope, that's clear enough. English is not one of my working languages.

Andrea


Direct link Reply with quote
 

Elif Baykara  Identity Verified
Turkey
Local time: 20:05
Member (2015)
German to Turkish
+ ...
Hi! Different rules apply. Dec 13, 2015

Here in Turkey, I need to consider two different types of taxes. A 20% income tax and a 18% VAT.

My unit price includes the income tax by nature (I pay it separately) and I have to charge the VAT separately after I calculate the total sum.

But for my international clients, I am not obliged to pay neither of them (I pay the taxes in another way) so I only charge by the unit price.

It might be beneficial to consult an accountant to spare future issues.



[Edited at 2015-12-13 11:23 GMT]


Direct link Reply with quote
 

jssnowden  Identity Verified
United Kingdom
Local time: 18:05
French to English
+ ...
TOPIC STARTER
Thank you! Dec 13, 2015

Thank you both, this has made it a lot clearer for me - good to know I'm not the only one on a Proz.com forum on a Sunday!
"You provide a word price without VAT as you will not need to charge VAT for every customer depending on in which country you are and in which country your customer is. There are also freelancers who never have to charge VAT, in France e. g. the autoentrepreneurs.

I do tell customers though when I will have to charge VAT. The word price is without though."

This is a perfect explanation @Andrea, thank you for your help! I had, for some obscure reason, been confusing VAT with income tax (both at 20%).


"My unit price includes the income tax by nature (I pay it separately)".

@Elif - thank you for your input as well, I've been looking at UK tax and VAT guidelines as that is where I am currently living and it appears that I'm not over the threshold yet (nor will I be for this year which is handy) so I don't have to worry too much yet. I can't justify a visit to the accountant for the money I earn just yet!


Direct link Reply with quote
 

Sheila Wilson  Identity Verified
Spain
Local time: 18:05
Member (2007)
English
+ ...
Something to bear in mind Dec 13, 2015

the_matador wrote:
I've been looking at UK tax and VAT guidelines as that is where I am currently living and it appears that I'm not over the threshold yet (nor will I be for this year which is handy) so I don't have to worry too much yet. I can't justify a visit to the accountant for the money I earn just yet!

Yes, the threshold in the UK is quite high, so you don't have to register for VAT if you don't wish to. However, not registering does have some negative effects too. I expect it isn't worth it at the moment, but you might want to register voluntarily before too long. The cons that I know of (I haven't lived there for over 20 years, so I'm just going by what I've read here) are:

- You can't claim back the VAT you spend on business-related expenses. So the 20% VAT added to the price of a computer is down to you.
- If you do business with other EU countries, you may encounter problems. This is because your client may expect you, as a business, to have a VAT number, and may be unwilling to work with you if you can't provide the all-important code for their own VAT returns. For more on that, there are some truly mammoth threads dating back to early this century.
- If you outsource to freelancers anywhere in the EU who are registered for VAT, or if you go to them for proofreading etc, then you'll have to pay their invoice including VAT.


Direct link Reply with quote
 

Peter Shortall  Identity Verified
Local time: 18:05
Member
French to English
+ ...
Not if you're below the threshold Dec 13, 2015

As you already seem to have realised, no, you don't have to charge VAT if your income is below the threshold (I can't remember off hand exactly what it is, but I believe it was in the region of £60k last time I checked). As Sheila has said, you can choose to register for VAT voluntarily, but I haven't done that and I don't think I know anyone who has.

You might find that some clients in other countries will ask you for your VAT registration number. Not all clients realise that VAT registration is not compulsory in the UK, and when you try to set them straight, some of them can take a lot of persuading! But that's the way it is here.

One or two of my clients require me to quote the relevant UK legislation on my invoices to prove that I don't need to be registered for VAT. This is what I put:

"In accordance with Schedule 1 to the Value Added Tax Act 1994, in conjunction with the Value Added Tax (Increase of Registration Limits) Order 2007, no VAT is chargeable as total annual turnover is below the minimum UK threshold for VAT registration."

If anyone queries your VAT status, you can cite that.

[Edited at 2015-12-13 12:59 GMT]


Direct link Reply with quote
 

Dan Lucas  Identity Verified
United Kingdom
Local time: 18:05
Member (2014)
Japanese to English
Might be useful further down the road Dec 13, 2015

Sheila Wilson wrote:
- If you do business with other EU countries, you may encounter problems. This is because your client may expect you, as a business, to have a VAT number, and may be unwilling to work with you if you can't provide the all-important code for their own VAT returns. For more on that, there are some truly mammoth threads dating back to early this century.

I can second this. In the threads Sheila mentions, basically half the participants say something like "client is an idiot, this is not required and you should ignore such requests or point them to the relevant piece of legislation as proof".

The other half of the participants say "maybe it's required, maybe not, but the client wants it and refuses to do business with me without it, so if I want the business it looks like I need a VAT number". The arguments bounce back and forth, mutate, wax, then wane, then surge again and continue for dozens of pages.

Despite being well under the 80k+ threshhold, I registered earlier this year. It was pretty painless. I do a VAT return every quarter (my existing accounting package handles it transparently) and expect to reclaim £500 or so in VAT on an annualised basis.

I will certainly come out ahead in financial terms and that's before I take into account its usefulness in obtaining more work by soothing the savage breast of certain European clients. Worth it? For me, yes, but probably not if you're just getting into the business.

Regards
Dan


Direct link Reply with quote
 

jssnowden  Identity Verified
United Kingdom
Local time: 18:05
French to English
+ ...
TOPIC STARTER
Accounting package - worth using at such an early stage? Dec 13, 2015

@Peter, many thanks - that citation will prove useful in the event that it is required. So far I haven't needed it, but point taken about the need to quote as/when required.

"Despite being well under the 80k+ threshhold, I registered earlier this year. It was pretty painless. I do a VAT return every quarter (my existing accounting package handles it transparently) and expect to reclaim £500 or so in VAT on an annualised basis."

@Dan, might I enquire as to what accounting medium you use? I.e. own tracking on a spreadsheet, accountancy software or accountant?

Many thanks
Jonny


Direct link Reply with quote
 

Samuel Murray  Identity Verified
Netherlands
Local time: 19:05
Member (2006)
English to Afrikaans
+ ...
@Dan Dec 13, 2015

Dan Lucas wrote:
I do a VAT return every quarter (my existing accounting package handles it transparently) and expect to reclaim £500 or so in VAT on an annualised basis.


To get GBP 500 VAT back at 20% VAT, you would have to spend GBP 3000 per year on business expenses for which you can get VAT back (not all businesses expenses do). Is that more or less right?


Direct link Reply with quote
 

Dan Lucas  Identity Verified
United Kingdom
Local time: 18:05
Member (2014)
Japanese to English
Even Excel would do Dec 13, 2015

the_matador wrote:
@Dan, might I enquire as to what accounting medium you use? I.e. own tracking on a spreadsheet, accountancy software or accountant?

I use a web-based package called Accounts Portal, partly because my accountant is used to it and I can give her access to check stuff out. It costs me around £12 per month including VAT.

However, you could use Excel if you're good with that. All it requires is for you to make a list of transactions, I suppose. I myself considered knocking up something custom - I virtually lived in Excel for a couple of decades - but then I decided that I wouldn't be able to avoid the temptation to mess around "improving" it instead of doing real work.

Same goes for invoicing. There's absolutely nothing to stop you from using Excel or Word, but I just bought Translation Office 3000 and had done with it.

Regards
Dan


Direct link Reply with quote
 

Dan Lucas  Identity Verified
United Kingdom
Local time: 18:05
Member (2014)
Japanese to English
Expensive, life Dec 13, 2015

Samuel Murray wrote:
To get GBP 500 VAT back at 20% VAT, you would have to spend GBP 3000 per year on business expenses for which you can get VAT back (not all businesses expenses do). Is that more or less right?

More or less. The biggest single expense item for me is accounting fees. I've spent a bit more than I usually would on other items, such as accommodation and travel for IJET-26 (£500 or so there), new computer hardware and so on. It mounts up.

Dan


Direct link Reply with quote
 

Gabriele Demuth  Identity Verified
United Kingdom
Local time: 18:05
Member (2014)
English to German
Tax Threshold in the UK Dec 13, 2015

Peter Shortall wrote:

As you already seem to have realised, no, you don't have to charge VAT if your income is below the threshold (I can't remember off hand exactly what it is, but I believe it was in the region of £60k last time I checked). As Sheila has said, you can choose to register for VAT voluntarily, but I haven't done that and I don't think I know anyone who has.

You might find that some clients in other countries will ask you for your VAT registration number. Not all clients realise that VAT registration is not compulsory in the UK, and when you try to set them straight, some of them can take a lot of persuading! But that's the way it is here.

One or two of my clients require me to quote the relevant UK legislation on my invoices to prove that I don't need to be registered for VAT. This is what I put:

"In accordance with Schedule 1 to the Value Added Tax Act 1994, in conjunction with the Value Added Tax (Increase of Registration Limits) Order 2007, no VAT is chargeable as total annual turnover is below the minimum UK threshold for VAT registration."

If anyone queries your VAT status, you can cite that.

[Edited at 2015-12-13 12:59 GMT]



For a sole trader the VAT threshold in the UK is GBP 82,000.

https://www.gov.uk/business-legal-structures/sole-trader

I am registered as a sole trader and have something like the above added at the bottom of my invoice, which I added after I was asked about it by a client.


Direct link Reply with quote
 


To report site rules violations or get help, contact a site moderator:


You can also contact site staff by submitting a support request »

Price per word... +VAT?

Advanced search







SDL MultiTerm 2017
Guarantee a unified, consistent and high-quality translation with terminology software by the industry leaders.

SDL MultiTerm 2017 allows translators to create one central location to store and manage multilingual terminology, and with SDL MultiTerm Extract 2017 you can automatically create term lists from your existing documentation to save time.

More info »
Anycount & Translation Office 3000
Translation Office 3000

Translation Office 3000 is an advanced accounting tool for freelance translators and small agencies. TO3000 easily and seamlessly integrates with the business life of professional freelance translators.

More info »



Forums
  • All of ProZ.com
  • Term search
  • Jobs
  • Forums
  • Multiple search