It depends what sector your looking at usually the larger companies will tell you what there going to pay you
I think you need to rework your fuel figures to litres used and cost the price ex vat ie. 220 miles one way works out at 125 litre at say 86.16 ex vat works out at £107.7, personally I think 8 mpg is too high I’d cost at 6 myself. also are your hire costs plus or ex vat usually these will be given to you ex vat
Alix776 thanks for that.
The confused with TAX thing still lingers within. I don’t get what you mean do fuel costing’s ex VAT! I will have the VAT to pay at some point won’t I so surely I need to add this in to my costing’s equations. Also, when quoted say £299 ex VAT for vehicle hire ( £358.80 incl VAT) don’t I also work on the include VAT figure when costing too? I know this is simple stuff for many to grasp just how Tax coming or going works with business but for me until the penny drops I suppose my workings will be out of focus. Thanks again.
Figures given to you from hires companies are usually ex vat so you need to add vat to those figures your self and incorporate them in to your costings. You will be able to claim vat back on these items but you will need to add them to your costings including vat as this will allow you to know if the mileage rates you are given will be viable for you to run at. If your starting off with one truck them you’ll have to do the driving yourself to make the bussiness viable. Also have you factored in you payment terms if your not going to get paid for 60-90 days are you going to be able to run the truck. As most fuel cards allow 14 day terms. How are you going to pay your household bills too in this time
As for fuel figures my fuel card company text me each week with next weeks fuel price this price is sent ex vat so i have to add vat to this price to make sure it’s cheaper than pump price.
Yes, I realise the 2-3 months start off period can be a worry but I think this is covered. When you say I will be able to claim tax back( I know this is accountant territory) whats the % I will get back if any?
You really need to do business course before you start as an od or it will end in tears. If you cannot grasp invoicing or vat from hmrc S web site them you NEED to understand all this before starting out.
Ok this is the way I understand VAT, I don’t have to understand the ins and outs as we have an account department, but I have to understand our transport costs to quote on various out side jobs we get.
As a VAT registered business you will claim the VAT back on item and services you buy in, when you sell goods or services you add VAT to your bill. Every so often the taxman will want his money, he’ll also give you back the VAT money on the goods and services you bought, provided you have the receipts etc. This is why you work your costs without VAT as you get it back and quote a job as +VAT because you have to give it to the taxman.
The normal rate is 20%, if you want to work out the cost of an item is without VAT, multiply the inclusive price by 5 and divide by 6. To work out how much VAT you add to the bill multiply the price by 0.2 and add it to your price. Or alternately just multiply by 1.2 and get the final price including VAT.
But as I said before, you really need some experience, of either business in general or preferably the haulage industry before you go it alone. Nobody is trying to put walls in your way, but most have read your many posts and are worried about how little you know and the ones that run their own trucks can see you really risk making a massive mess of it.
For the purposes of getting your head around vat, it will be easier to tell u over the phone than on here.
So for now, do all your expenses and your charging out rates, without the vat element.
So returning to your charge out rate, if you could get £2.29 per mile, and enough of them, your on it. Do it a couple of ways , with and without back loads and post your workings below.
In scenario one, work me 150 miles at your charge out rate, running back to base empty.
On scenario two, work it that you get a backload of a 100 miles paid, at what you would like to get paid, and then let’s look again at seeing if your turning a profit.
Stick with 8mpg, don’t know why you wouldn’t. Let’s look at how many litres of fuel were using each week, and then we’ll also look at how much you would need to survive to trade until you got your first invoice paid
Matt
Matt, all my working - vat come down to £126
Other way with return load I would be looking for £150 ! for load back - £76 fuel = £74 + £65 = £139
I would think though that if it was 150 miles job and I was charging one way then it would be more like £3.03 per mile.
Thanks for the trouble Matt
Ok so if you give yourself a few more variables you’ll start knowing what you want per day, per week and like chaversdad says, he has a simple way of working it out for him.
When you say u had £65 left in scenario 1, had you still paid your driver salary at that? (You)
I’m going Bristol tomorrow, my trailer is already loaded and ready to roll. I think it’s a £350 job, then I have a backload of 3 tons, 45 minute reload, 45 minute offload, and I prob go 8 miles past my op centre (16 total), I’m not sure of dollar on that but it won’t be below £200.
If you look at £2500-£3000 weekly turnover you will no doubt commit, or use chaversdad theory, or whatever else. A lot of guys get there self in a tizz thinking that they are better off taking poor paid jobs to keep their wheels moving but that’s how they fall on their ar5e in my opinion.
If you get trading your likely to get through 850 litres of diesel, need to fund it for ten weeks in succession, plus your truck, insurance and all your bumflufferies?
What about doing it the other way where you buy a truck, for say £8000, maybe £10,000 is that an option?
You can spot hire a truck, so no commitment, for £400 a week, maybe that would help you.
Keep at it pal
Matt
The proper name for VAT is Value Added Tax, which is a correct description of what it is. A tax on the increase in value of a product or of a service provided. You can think of it as Cameron’s bit if you like - something that is really nothing to do with you, you are not charging it - he is. VAT is ultimately paid by the last person in the chain or the ‘end user’ as HMRC term it. Perhaps when doing your calculations you could write any VAT amount down in a different colour, You will certainly have it in a different column in you accounting books.
So using VAT @20%
You as a manufacturer buy raw materials @ £1 +VAT so VAT = 20 pence.Total paid to supplier £1.20
Manufacturer makes product and sell to wholesaler @ £1.50 +VAT so VAT =30 pence Total of invoice incl VAT £1.80
Value added from raw materials to finished product 50 pence. It is important to remember that this does NOT represent a Profit of 50pence on the manufacturing operation.
20% of 50pence =10 pence which is difference between VAT paid by you and the VAT that you charge 30-20=10
so this carries on up the chain from wholesaler to retailer adding 20% to the price and each reclaiming the VAT that they PAID until it is bought by the last person in the chain Joe Bloggs, who is the end user and he is the one who effectively finally pays the VAT which by now may well be £10 +VAT £2 = £12 . In reality it will be the retailer who has collected the VAT and who will be paying it to HMRC.
Value added between raw materials and Retail price to Joe Bloggs £9. 20% of £9 =£1.80 difference between VAT paid for raw materials and VAT paid by Joe Bloggs £2 - 20pence = £1.80
cav551:
VAT is ultimately paid by the last person in the chain or the ‘end user’ as HMRC term it. Perhaps when doing your calculations you could write any VAT amount down in a different colour, You will certainly have it in a different column in you accounting books.
Yes, if it’s any help to the OP, this is what a ledger book should look like. I’ve got a few more items to write up, but you get the drift.
So, basically, if I did say £8,000’s worth of work this month then I would have added 20% VAT to the invoices- £1,600. My VAT liability to HMRC would be £1,600 minus all of the VAT I have paid out, in the right-hand-column. I suppose you could do the VAT return yourself, I leave that to the accountant to sort out.
Is this correct then, basically any how.
Fuel I use in year = 40800 ltrs. = £36,307.00 +VAT @ 20% =£7,261.00 total = £43,568
unit hire year.= £15600.00 + VAT @ 20% =£3,120.00 total £18,720.00
Trailer hire year. = £4560.00 +VAT @ 20% = £912 total £5472
I invoice the haulier for my years services @ £28,800 +VAT @ 20% £5760.00 total £34,560.00
7,261
3,120
912
INPUT Total VAT 11,293
OUT PUT VAT - 5,760
= 5533
So the sum is imput tax - output! is that correct? and if so, do you then get the return of £5533
The figures are correct. For the year your sales totalled £28,800 and your expenses were £56,467, meaning that you had made a loss of £27,667. Assuming 7 MPG your net receipts have been 45p per mile.Your year end "Trading Profit and Loss Account " will not make any mention of VAT at all.
Your input and output VAT figures are correct…for the year… and yes you would have received net payments DURING THE COURSE OF THE YEAR which amounted to £5533 from HMRC.
VAT returns are made once every three months, so in practice you may well as a new start business have got most of the £5533 after the end of your first VAT quarter. This would be assuming that you had paid for ALL your unit and trailer hire charges in advance; so you would probably have got a payment from HMRC for the end of your first three months trading sometime during month five… There is a three month VAT accounting period, then one month for you to make a VAT return by the first of the next following month.
In reality you are not going to be able to carry on like this because on these figures you are making a loss. You should be making a net payment of VAT each quarter.
If you had invoiced the haulier £128,800 + VAT £25,760 then you would have been receiving £2.05 per mile run. During the course of the year you would have paid HMRC £14,467 in VAT. However these figures then indicate an unrealistic £72,000+ profit for the year so your actual costs are much higher.
For the benefit of this youngster here is the reality of our industry today,forget your costings.I only do traction for the company I work with but Thursday
found me empty in Heywood so he found a load from Yearsley to go to Coventry,a short journey 3 hours which paid accordingly and put me in place to
collect our export load next morning.The reality of the job was…5 hours to load…and in Coventry the company I was delivering to was on the ball for
a change and only took 2 hours to unload,this load was just 20 plts.of frozen.Since I am sure you can add up that little low paying job took 10 hours, now
if Yearsley paid demurrage,waiting time that might have been a nice little earner but they don’t so just another little job where it would have been
more acceptable to me,French derv is so cheap,to run down empty.There is no driver shortage just massive incompetence by those who should know better
and our industry has forever been thus,that is the reality of the UK’s transport industry today best go and get a job flipping burgers.
Thanks Cav551. I think I confused the numbers by putting in the ivoiced for £28000 bit. My figures were worked on a charge of £1.59 per mile which comes to £100,014 for the year. 40800 ltrs / 48 wks = 850 ltrs a wk. @ 2.5 klm per ltr= 7 mpg =£35,947 fuel cost. That would be my income excl VAT. I will get a grip eventually. I go see an accountant later this week so he can slap me about a bit till it sinks in.
Armagedon:
There is no driver shortage just massive incompetence by those who should know better
and our industry has forever been thus,that is the reality of the UK’s transport industry today best go and get a job flipping burgers.
In one ear, out the other,
reminds me of that fella 4/5yrs ago that went and bought the £80k Hino tipper,
all gonna end in tears 
Ah! another chappie with one of those crystal balls things. As said, a few people have placed worthwhile comments on here,though you do always get one or two full of their own importance . Any how, those aside, I am cracking on in a positive direction. Took some sound advice from accountant and business account up and running. On good advice from some on here, am now getting some valuable time in behind the wheel though I must add that was always my plan. Cheers
in my experience, there are 2 types of owner driver. Either somebody who wants to run their own business or somebody who wants their own truck. The latter just want to stay local, cruising around with their arm resting on the window flashing their mates.
I would think seriously about going head first into O/D straight from the forces.
I was in MT In the forces done all my magement tickets and ADR Surface and Air advisor, Explosives Advisor for transport.
I was transport coordinator / manager for 18 months done my cpc management.
Also been a class 1 driver for 18 months.
If I was you, I would get few years civy commercial experience. Including management and driving before making the plunge into the O/D game.
You will need to have the guaranteed work week in and week out.
Have a drive in an arctic for few weeks and see how many O/D there is on the road.
Mostly ones you will see are low loaders or some other specialist work.
I don’t think it’s worth the time and stress pulling trailers for the big companies. You get all crap work they don’t want and the rates are slashed.
Then doing your own work and finding back loads are you seriously going make much more profit than £500-700 after tax which you would driving.
I was chatting to my boss other day he pulls trailers for one big companies he says he hardly makes profit on the one truck pulling the trailers. Just keeps it going so one trucks are 100% wheels moving all week.
Some of the companies won’t pay till months after the jobs as well.
If your relying on one company in your area for work and it goes under I pretty much say you will go under too.
If I was you I would think about a different career to pump your money into if you got that much to use.