Accountants for Interior Designers
Two contracts decide your tax bill: who buys the furniture, and who pays the decorator.
Get the first wrong and you can cross the £90,000 VAT threshold years earlier than you needed to. Get the second wrong and you are a contractor under the Construction Industry Scheme without knowing it, with monthly returns and monthly penalties. Neither of those is about design. Both are about whose name is on a piece of paper, and both are fixable before they happen rather than after. Zmartly is CIMA-regulated, 240+ UK businesses served, on fixed monthly fees from £129 plus VAT.
Do I charge VAT on furniture I buy for a client?
- It depends whose name is on the supplier invoice
- If you invoice in your own name for goods you arranged, HMRC requires you to treat the transaction, for VAT purposes, as though it were both a supply to you and a supply by you. The full selling price is then your turnover. If your client contracts the supplier directly and you charge a fee for arranging it, only the fee is yours. Same money in your pocket, very different numbers on your VAT return.
- Your registration test counts what you supply in your own name
- HMRC spells this out for agents: the value of your taxable supplies includes both the value of your supplies to your principal and the value of any taxable supplies you make in your own name. So procurement run through your own books is not invisible to the £90,000 threshold. It is usually the largest single number in it.
- The threshold bites harder in design than in most trades
- If your clients were VAT-registered businesses, registering would be an administrative cost and little more, because they would reclaim what you charged. Most interior design clients are private householders and can reclaim nothing. Crossing the threshold therefore means either a 20 per cent price rise to your client or a 20 per cent hit to your own margin, and it pulls your design fees into VAT as well, not just the furniture that pushed you over.
- A disbursement is a test, not a label
- This is where designers get advice that is too comfortable. HMRC allows you to treat amounts as disbursements where you merely pay third parties as the agent of your client and debit your client with the precise amounts paid out. Precise is the operative word. If you mark it up, you have almost certainly bought as principal. The paperwork has to be built before the project rather than reconstructed at year end.
The same £85,000 of income, read two different ways
Anna runs a two-person studio in Leeds. Her design fees come to £55,000 a year. She also specifies and sources furniture and fabric: last year she paid suppliers £120,000 and invoiced clients £150,000 for those goods, keeping £30,000 on the procurement. Her real income is £85,000 whichever route she takes. What changes is what HMRC counts as taxable turnover.
- Design fees
- £55,000
- Goods bought in her own name and resold
- £150,000
- Taxable turnover if she buys as principal
- £205,000
- Taxable turnover if the client contracts the supplier and she charges a £30,000 fee
- £85,000
- VAT registration threshold
- £90,000
One route puts her well over the threshold and has done for some time. The other keeps her below it. The route was decided by the contracts, not by the design work, and it was decided before the invoices were raised. Which side of it a particular studio falls on is a question of fact about how it contracts, and it is the first thing we settle for a new client.
Could I really be caught by the Construction Industry Scheme?
Quite possibly, and it turns on one thing: who signs the contract with the decorator.
- Painting and decorating is construction work
- HMRC could not be plainer. Painting and decorating is regarded as a construction operation, sitting in the covered list alongside alteration, repair, extension and demolition. What is outside the scheme is worth knowing too: the professional work of architects and surveyors, carpet fitting, and delivering materials.
- The £3 million threshold is not the shield most studios assume
- A mainstream contractor is, in HMRC’s words, any business that includes construction operations and pays others for work carried out under the scheme. The separate £3 million test over a rolling 12 months is written for concerns whose activities do not include construction operations at all, and HMRC’s examples for it are departmental stores, breweries, banks, oil companies and property investment companies. If contracting decorators is part of how you deliver a scheme, the threshold never comes into it.
- Specifying is not the same as contracting
- There is a line that points the other way and it matters. On managing agents HMRC says the managing agent will not generally be a contractor as defined within the scheme, because the agent’s role would be to see that the work is carried out in accordance with the principal’s contract with the subcontractor. But HMRC also addresses the case where the agent enters into a contract on their own behalf. So: your client contracts the decorator and you specify and supervise, and CIS is unlikely to reach you. You contract the decorator and pay them, and you need your CIS position settled before the first payment, not after it.
- A householder client protects your client, not you
- Private householders are not counted as contractors, so a homeowner paying a decorator direct is outside the scheme. That exclusion covers your client. It does nothing for you, because if you are the one making the payment you are the one being tested. Where CIS does apply it means verifying each subcontractor with HMRC, deducting at the rate verification returns, and filing a monthly return by the 19th. The late-return penalties are monthly and they stack.
- One invoice can pull your design fee into the reverse charge
- The domestic reverse charge only runs between businesses that are both VAT registered where the supply is reported under CIS, so on private residential work it is not in play at all. On business jobs, your own professional work is on HMRC’s exclusion list, which names the professional work of architects or surveyors, or of building, engineering, interior or exterior decoration and landscape consultants. Decorating is not excluded: painting or decorating the inside or the external surfaces of any building or structure is squarely in scope.
- And the two do not stay in separate boxes
- HMRC’s rule is that normally if any of the services in a supply are subject to the reverse charge, all other services supplied will be also. There is a narrow let-out where the reverse charge part is 5 per cent or less of the whole supply, but it applies only where supplier and customer agree from the start of the contract, on overall contract values. So invoicing your design fee together with bought-in decorating does not keep the fee out of the reverse charge. It normally pulls the whole invoice in. The same logic runs through CIS itself: where a contract includes some operations within the scheme and some excluded, all payments under that contract come within it.
What does an interior design accountant actually do?
01VAT structuring on goods and FF&E
Per client and per contract, whether marked-up furniture and furnishings are your supply as principal or your client’s purchase, documented before the project rather than argued about after it, with your taxable turnover tracked against the £90,000 registration and £88,000 deregistration lines.
02CIS registration, verification and monthly returns
Where you pay decorators or fit-out trades, we register you as a contractor, verify subcontractors, apply the deduction rate verification returns, file by the 19th each month, and reclaim CIS suffered where you are also a subcontractor on a larger job.
03The reverse charge on the jobs where it applies
Including the written end user and intermediary supplier notifications that most studios never get round to. Verbal is not enough, and without the notification the exit is not available.
04Project-level bookkeeping
A job code on every transaction so you can see margin per scheme rather than per studio, deposits treated as money you owe work against rather than profit already earned, procurement kept separate from fee income, and goods held for resale sitting as stock rather than as equipment.
05Capital allowances, mileage and use of home
The Annual Investment Allowance covers most plant and machinery up to £1 million a year, cars excluded, which for a studio means computers, large-format printers, sample storage and fit-out. Mileage to sites, showrooms and suppliers is 55p a mile for the first 10,000 business miles in 2026/27 and 25p above that, for cars and vans. Use of home on the simplified flat rate or an apportionment of actual costs.
06Sole trader or limited company, and the compliance
We model your figures both ways and sometimes tell you to stay as you are. What tips the balance for a design studio more often than the tax rate does is client money: substantial deposits and suppliers contracted in your own name are risks you carry personally as a sole trader. Plus year-end accounts, Corporation Tax or Self Assessment, payroll, VAT returns and Making Tax Digital for Income Tax as it phases in.
How do we get your studio set up?
- 01
Discovery
Understanding your business needs.
- 02
Solution Design
Crafting your custom accounting strategy.
- 03
Onboarding
Quick and easy integration.
- 04
Regular Rhythm
Consistent monitoring and reporting.
Guides for interior designers
Plain-English explainers, kept current with the latest HMRC rules.
Interior design VAT, CIS and tax questions
It depends whose name is on the supplier's invoice. If you invoice in your own name for goods you arranged, HMRC requires you to treat the transaction, for VAT purposes, as though it were both a supply to you and a supply by you, so the full selling price is your turnover. If your client contracts the supplier and you charge a fee for arranging it, only your fee counts. HMRC allows amounts to be treated as disbursements only where you merely pay third parties as agent of your client and debit the precise amounts paid out, so marking a cost up is a strong indication you bought as principal. This has to be set up in the contracts rather than decided at year end.
Yes, if you pay decorators or fit-out trades yourself. HMRC treats painting and decorating as a construction operation, and a mainstream contractor is any business that includes construction operations and pays others for work carried out under the scheme. The £3 million threshold you may have heard about is written for concerns whose activities do not include construction operations at all, so it is not the protection it looks like. If your client contracts the trades directly and you only specify and supervise, you are much closer to HMRC's managing agent position, where CIS generally does not reach you. Which side a particular studio falls on is a question of fact about how it contracts, and it is worth a written view rather than an assumption.
Only where your client is VAT registered and the work is reported under CIS, so not on private residential work. Your own professional work is on HMRC's exclusion list, which names the professional work of building, engineering, interior or exterior decoration and landscape consultants. But if you invoice your fee alongside bought-in decorating as a single supply, HMRC's rule is that normally if any of the services in a supply are subject to the reverse charge, all other services supplied will be also. There is a narrow let-out where the reverse charge part is 5 per cent or less of the whole supply, and it applies only where supplier and customer agree from the start of the contract on overall contract values.
When your total taxable turnover for the last 12 months goes over £90,000, or when you expect it to go over £90,000 in the next 30 days. The deregistration threshold is £88,000. For a design studio the live question is almost always whether procurement counts towards that figure, which takes you back to whose name is on the supplier's invoice.
By coding every transaction to the project and by keeping deposits out of your profit figure. Design income arrives as a deposit months before anything happens, then stage payments, then a retention that may sit unpaid for a long time, against a tail of costs on every scheme. Without those two disciplines a studio's accounts show cash flow rather than profitability, which is how a busy year ends with a tax bill nobody expected.
Fixed monthly fees of £129, £250 or £499 plus VAT depending on the support you need, on a rolling monthly basis with no long tie-in. You get a named qualified accountant who already understands deposits, stage payments, retentions and the goods-versus-fee split, and we reply within 72 hours. It is fixed monthly pricing, so asking a question is never an extra cost.
Yes. We work online with clients across the UK, on a named accountant rather than a call centre. We set your books up in Xero, QuickBooks, FreeAgent or Sage, whichever you already run, rather than asking you to move.
Stop overpaying tax. Start filing in 5 days.
Thirty minutes with a qualified accountant. Most owners uncover £1,000-£3,000 in annual savings on the first call. If we are not the right fit, you walk away with a free tax review on the house.
