going green
You are allowed to claim 20p per mile when using a bicycle for a business journey.
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did you know….
….small businesses can save even more tax and effort through the flat rate VAT scheme?
The flat rate VAT scheme is a simplified means of recording and paying VAT. It can also, in a 
number of cases result in you paying less VAT to HM Revenue & Customs than would be the case in a traditional VAT calculation.
The simplicity comes from not having to split out the VAT on your purchases – no longer do you have to think – “can I claim for this”. This can be especially time consuming when running a small business. Instead, you record your purchases as if you weren’t VAT registered. You still charge your customers VAT as normal at the appropriate rate – normally 15%. When it comes to calculating the VAT to be paid over, you add your VAT to your sales and then multiply by the flat rate percentage applicable to your business. As an example, if you had sales of £10,000 and a flat rate percentage of 9%, the VAT payable would be 9% of £11,500 or £1035, instead of the £1500 you have charged your customers.
The extra profit comes through looking at your purchases. In the above example, if you had VAT on purchases in the quarter amounting to £250 then under tradition VAT you would subtract this from the VAT on sales leaving £1250 to be paid across. The flat rate scheme would only pay across £1035 leaving you and additional £215 profit. You can also receive a first year of discount of 1% on the amount of VAT to be paid over.
Flat rate VAT is not profitable for everyone, it depends on the level of your purchases, your business sector (as different sectors have different flat rate percentages) and your sales. As an example, if your normally receive a VAT repayment, this scheme would not be for you.
Inca helps its clients decide if flat rate VAT is beneficial to them with a free of charge calculation. If there is a financial bnefit to switching, we manage the registration and show the client how to prepare their first flat rate VAT return - all for a standard fixed fee. If you’d like to learn more, please feel free to give us a call on 0845 644 3579.
