![]() ![]() The rules can operate harshly for limited-cost businesses. Limited cost businesses must use a higher rate of 16.5% to work out the VAT that they pay over to HMRC, regardless of the sector in which they operate. These are businesses where goods are less than either 2% of turnover or £1,000 a year (£250 per quarter). The scheme can be particularly costly for limited-cost businesses. Much will depend on whether the traders input VAT is covered by the margin allowed by the flat rate percentage. This will be the case if the amount determined using the flat rate percentage is more than the difference between output VAT and input VAT in the period. The main disadvantage is that more VAT may be payable to HMRC than if VAT is calculated in the traditional way. The scheme may also save money if the VAT due at the flat rate is less than that using the traditional calculation. The VAT that is paid over to HMRC is simply the flat rate percentage multiplied by the VAT-inclusive turnover in the period. There is no need to keep detailed records, particularly of VAT on purchases and expenses. The main advantage of the scheme is that it is simple and that it saves work. If this is the case, the trader must leave the flat rate scheme and work out the VAT due to HMRC in the usual way. Once in the scheme, a trader can remain unless their turnover in the last 12 months was more than £230,000 including VAT, or they expect their turnover in the next 30 days alone to be more than £230,000 (including VAT). A trader cannot re-join the scheme if they have left it in the previous 12 months. This is the total of everything that they sell that is not exempt from VAT and is exclusive of VAT. The scheme is only open to VAT-registered businesses which expect their annual VAT taxable turnover to be £150,000 or less. The percentage that they pay is set by HMRC and depends on the business sector in which they operate. Under the scheme, traders pay a percentage of their VAT-inclusive turnover over to HMRC, rather than working out the difference between their output VAT and their input VAT. However, while it may save work, it may also cost more than working out VAT in the traditional way. But don't forget that if you have other debts, you must consider them in addition to the mortgage payment to determine how much you can genuinely afford.The flat rate scheme offers VAT registered traders who meet the eligibility conditions a simpler way to work out the VAT that they need to pay over to HMRC. The Federal Housing Administration (FHA) is a bit more generous, allowing consumers to spend as much as 31% of their gross income on a mortgage. ![]() One of the easiest ways to calculate your homebuying budget is the 28% rule, which dictates that your mortgage shouldn't be more than 28% of your gross income each month. There are national homebuying programs like FHA or VA mortgages designed to help first-time homebuyers.If you could make a 20% down payment on a home, you may not need private mortgage insurance.Homeownership involves a variety of ongoing costs, including homeowners' insurance, property taxes, and repair expenses.Calculate your entire debt-to-income ratio: all your monthly expenses divided by your gross income to determine if a home is affordable. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |