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VAT changes to eBay charges

Posted by Charlotte Morley in Accounts, Business, News, Sales, Tips, Xero | 0 comments

eBay recently wrote to business sellers to remind them of the upcoming changes to how VAT will be charged on fees. Effective from the 1st of August VAT will be applied to all fees. For the first time sellers will be able to reclaim the VAT on their VAT returns.

Historically sellers were unable to reclaim VAT but if they gave eBay their VAT number eBay would deduct the VAT at source. Then for the past 18 months eBay had special dispensation to not charge VAT for any business seller (even if they weren’t VAT registered).

This follows on from last year’s package of measures introduced by the Chancellor, aimed at tackling the rapidly growing VAT evasion by overseas traders that sell goods in the UK via online marketplaces such as eBay, Amazon and others. As a result, HMRC was given the power to force online marketplaces to ensure that their overseas customers were registered and accounting for VAT or risk being liable for the VAT themselves.

The change to how eBay charge VAT

Now, from the 1st of August eBay UK will bill from a UK entity and charge VAT on fees and only those who are VAT registered and able to claim input tax credits will be able to recoup the VAT paid to eBay.

Many sellers have welcomed the move – eBay will be charging VAT as a UK entity and the VAT will be passed to the exchequer. Sellers, especially those who have been suspected of dodging VAT will find the VAT added to their eBay invoice and if they’re not registered for VAT with HMRC won’t be able to claim it back!

For sellers who can reclaim VAT it’s effectively just a cash flow and accounting change with no financial impact to their bottom line.

Those it will negatively impact

There are a few sellers who will be negatively impacted – sellers registered as businesses whose turnover is too small to compulsorily register for VAT will either start paying VAT at 20% or take the decision to voluntarily register. Also sellers on certain VAT schemes who are unable to reclaim input VAT will also see their costs rise. It’s important to realise that this isn’t eBay’s fault however (net fees are not changing). VAT is a government mandated charge and for the past 18 months sellers have had a free ride and it’s just that this added Brucie bonus is coming to an end.

What if you’re billed mid month?

If you’re a business seller billed on the 15th of the month, your invoice dated the 15th of August 2017 will show VAT on all your fees. However, you’ll also see a credit for any VAT applied to your fees between the 16th and 31st of July.

If you need further help or have questions on VAT, we’d be happy to help. Perhaps we can help organise your accounts with a free month of Xero? Get in touch to organise a free of charge consultation. Drop us an email hello@thebusinesshut.co.uk or give us a call 01858 289189

Thanks for stopping by,

Charlotte

What is the Confirmation Statement?

Posted by Charlotte Morley in Accounts, Business, News, The Business Hut | 0 comments

You may have heard that from 30th June 2016 the confirmation statement replaces the annual return. We often get asked what this means and understand that you may still have questions. We’ve provided the details you need to know in our latest blog.

A Rise in the National Living Wage – April 17

Posted by Charlotte Morley in Accounts, Business, News, The Business Hut, Tips | 0 comments

From 1st April 2017 The National Living Wage (NLW) was given a little bump! The rise to £7.50 per hour is in line with Chancellor Phillip Hammond’s Autumn Statement announcement in November. The National Minimum Wage (NMW) is the minimum pay per hour most workers are entitled to by law. The rate will depend on a worker’s age and if they are an apprentice.

Budget 2017 – Headlines

Posted by Victoria Morley in Accounts, Business, News, Start Ups, The Business Hut, Tips | 0 comments

Here’s a brief roundup of the key headlines from the chancellor’s first Budget:

The state of the economy

  • UK second-fastest growing economy in the G7 in 2016.
  • Growth forecast for 2017 upgraded from 1.4% to 2%.
  • But GDP downgraded to 1.6%, 1.7%, 1.9% in subsequent years, then 2% in 2021-22.
  • Inflation forecast to rise to 2.4% in 2017-18 before falling to 2.3% and 2.0% in subsequent years.
  • A further 650,000 people expected to be in employment by 2021.

Public borrowing/deficit/spending

  • Annual borrowing £51.7bn in 2016-17, £16.4bn lower than forecast. Borrowing forecast to total £58.3bn in 2017-18, £40.6bn in 2018-19, £21.4bn in 2019-20 and £20.6bn in 2020-21.
  • Public sector net borrowing forecast to fall from 3.8% of GDP last year to 2.6% this year, then 2.9%, 1.9%, 1% and 0.9% in subsequent years, reaching 0.7% in 2021-22.
  • Debt rose to 86.6% this year, but will fall to 79.8% in 2021-22.

Are you MTD ready?

Posted by Victoria Morley in Accounts, Business, News, Xero | 0 comments

If you are a landlord, self-employed or a business director, there’s a new acronym doing the rounds that you will want to be aware of  – MTD (Making Tax Digital).

Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs – spelling the end of the annual tax return.