New ‘Starter Homes’ scheme gives 20% discount! Reply

Group of construction workers. House renovation.

The 20% discount is achieved by waiving local authority fees for homebuilders of at least £45,000 per dwelling on brownfield sites.

At the heart of the Starter Homes initiative is a change to the planning system. This will allow house builders to develop under-used or unviable brownfield land and free them from planning costs and levies. In return, they will be able to offer homes at a minimum 20% discount exclusively to first time buyers, under the age of forty.  Under the proposals, developers offering Starter Homes would be exempt from those Section 106 charges and Community Infrastructure Levy charges. The homes could then not be re-sold at market value for a fixed period – making sure that the savings are passed onto homebuyers.Gov.uk

To qualify first time buyers must be under the age of 40 and living in England.

 

steve@bicknells.net

Prompt Payment Discounts – new VAT rules Reply

Close-up picture of an invoice

Changes to UK legislation relating to prompt payment discounts will take effect in relation to supplies made on or after 1 April 2015. From that date, the way many businesses account for VAT when offering prompt payment discounts will change.

Currently businesses can issue invoices that give details of the amount of the prompt payment discount and its terms and show the VAT due calculated on the discounted price. If the discount is not taken up HMRC has not required businesses to alter the amount of VAT invoiced and accounted for.

After the change businesses must account for VAT on the consideration they actually recieve.

HMRC are currently consulting on the implementation of this legislation and the consultation ends on 9th September.

In many ways its surprising that it hasn’t always been the case that you pay VAT on the consideration!

steve@bicknells.net

How do I calculate the VAT on a Sales Promotion? 5

VAT  Sale

Now Christmas is over the shops are full of sales promotions, discounts, double counts, 50% off but how much VAT should be charged? And what type of business promotion would be best for your business?

Here are some to consider:

Discounts

Provided you aren’t connected to the person you are selling to, VAT is only payable on the discounted price. If you offer a retrospective discount or volume discount a credit note can be issued when the target is achieved.

Buy one get one free

Sounds simple but needs to be handled carefully as for VAT purposes the default assumption would be that one item is at full price and the other item is a gift, the gift would be subject to VAT (if it’s over £50 in value).  So for accounting and VAT purposes you should sell both items at 50% of their value.

Money-Off Coupons

These work in similar way to Discounts but in some cases the retailer will be able to recover the value of the Coupon from their supplier.

Cash-Back

The purchaser pays the full price and gets cash back. Often the manufacturer gives the cash back rather than the retailer, so the retailer accounts for VAT on the full price. The manufacturer pays the Cash Back to purchaser. The Manufacturer can then reduce their output tax for the Cash Back.

Gift Vouchers and Face Value Vouchers

There is no VAT on purchased gift vouchers as they are treated as cash equivalents, its only when they are used to purchase items that VAT needs to be accounted for.

It’s also common for Gift Vouchers to be lost and never used, which is great for the retailers.

If the voucher is sold for more than its cash equivalent then part of the value will be vatable.

Reward Cards

There are several ways to handle these let’s assume the points operator pays the retailer the value of the points, the operator will then reclaim input tax. Alternatives could follow the Discount rules or Voucher rules.

steve@bicknells.net

Increased Sales without discounting, guaranteed! Reply

The reason most businesses join bartercard is to increase their sales. Isn’t that what everyone wants? it’s why we go networking, why we advertise and its generally the reason we went into business in the first place – because we thought we could earn more (by selling more) than working for someone else.

When you barter using bartercard you swap your services at their full value, there are many discount schemes now being promoted, they generally get you to heavily discount your product/service and charge you a fee on top. The theory being that the new clients who use the discount scheme will want to come back and pay full price, it could work, but I suspect many people just take the special offers.

Bartercard now have 75,000 worldwide members, so there are plenty of businesses to swap with and Bartercard give a guarantee that they will get sales for your business. So if you want more sales, why not give it a go?

steve@bicknells.net