Flat Rate VAT For Affiliate Marketing
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 HMCE is calculated as a percentage of gross sales. Gross sales are net sales + the VAT charged to the networks.
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Save Tax and National Insurance with your limited company
It is possible to reduce your (UK) personal tax and national insurance by running your business via a limited company. The amount you can save will depend upon several factors:
- The company’s profitability
- Your personal circumstances
- The amount of funds you need to withdraw from the business
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How to form a limited company
Many businesses are making the change from being a sole trader to limited company to take advantage of the limited liability and also the opportunity for tax planning (click here for the “How to save tax and National Insurance” article).
Suppliers and customers often prefer to deal with a limited company as it can imply stability, longevity and also the company’s accounts and details of directors are in the public domain. This makes it easier for credit reference agencies and debt insurance providers to recommend credit limits. Unfortunately your competitors can find out about your company’s performance, ownership and mortgages etc at Companies House from only £1!
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A quick guide for your new limited company
Getting at your profits
Extracting your profits from your company can be by a mix of wage (ie under PAYE) and dividend. In order to pay a dividend the company must have sufficient after tax profits. ie for a £10k dividend to be paid the company must have approx £12.7k pre tax profits (corp tax rate of 21%).
Do not be tempted to withdraw more than is legally available as dividend, as it would be “illegal” and HMRC may class it as a salary or a loan to the director (taxable benefit in kind if over £5k) and charge tax & NIC.
For more on how to extract your profits in a tax efficient way, read our article “Save tax and National Insurance with your limited company”.
