VAT Threshold - PAYE Employee and Sole Trader

Good afternoon, I have a couple of questions around the VAT registration threshold (£85-90k over 12 rolling months) as I am currently employed full time (normal PAYE employee) while running a side hustle as sole trader. 1. Does my salary from employment, wether before or after tax, count towards the VAT registration threshold? So, if the threshold is £85.000 and I make £40.000/year working as employee in a company, does it mean that my threshold goes down to £45.000? 2. Under my business as sole trader what count towards the threshold? My gross income or gross profit? Or something else? For example, I buy an item for £50 and I have £10 in costs associated to it. I then sell the item for £100, realising £40. Do I need to use £100 or £40 to calculate the threshold? Thanks.

Hi You may find it useful to understand the basics of what VAT is. https://www.gov.uk/how-vat-works 1. No your PAYE salary does not count towards your VAT registration threshold. 2. The VAT threshold is calculated on your business turnover. Guidance is available here. https://www.gov.uk/register-for-vat VAT is not a tax on profit . VAT (Value Added Tax) is a tax added to most products and services sold by VAT-registered businesses. Your business profits will however contribute to your taxable income for income tax purposes.

Hi,
There would be a requirement to register for VAT if you are making taxable supplies over £90000. This would be your turnover, not your profit margin. In your example £100 would be the taxable turnover. You can see guidance here:
Working out whether you need to register
How and when to apply to register for VAT
Thank you.