Using the UK flat rate VAT scheme is quite often beneficial for affiliate marketeers. Many in the affiliate marketing sector have low overheads and in particular small amounts of input tax (VAT charged on purchases).
Under the flat rate scheme, input tax is not reclaimable and the VAT paid to HMRC is calculated as a percentage of gross sales. Gross sales are net sales + the VAT charged to the networks.
Read more about Flat Rate VAT For Affiliate Marketing
There is a great deal of confusion as to what you can and what you can’t deduct from your profit for tax purposes.
This tip gives a brief list of the types of expenditure you can claim, some of which you may already be deducting, some may be new to you and applicable to your business.
I originally posted this article on the a4uforum in March 2007, and have updated it for the current (2012/13) tax thresholds.
We recommend to all our clients that they maximise the use of their basic rate band. This can be done by declaring interim dividends to take total taxable income upto the maximum at which the basic rate will still apply.
As dividends have a 10% tax credit attached, this tax credit can be used to effectively pay your personal tax liability on the dividend.