Large amount of quidco cashback from business purchases - taxable?

Legacy_user

I am sure this is taxable but really need to phone HMRC!

Bought a lot of computer equipment for business, quidco cashback was over £1k.

Is this cashback "income" and taxable? or not?

zygurat789

berbastrike wrote: »

I am sure this is taxable but really need to phone HMRC!

Bought a lot of computer equipment for business, quidco cashback was over £1k.

Is this cashback "income" and taxable? or not?

Isn't it really a discount on your purchases?

InsideInsurance

Who is getting the "income"? Your business or you?

Generally cashback is not considered income for an individual, I suspect it may be different for a business.

General_Grant

berbastrike wrote: »

I am sure this is taxable but really need to phone HMRC!

Bought a lot of computer equipment for business, quidco cashback was over £1k.

Is this cashback "income" and taxable? or not?

Is the business for which the equipment was bought (a) a limited company or (b) a sole trader or partnership where you are the sole trader or a partner?

If (a) then either the company pays you the nett price (ie the cost after the discount) and no tax is due on the cashback or it pays you the "full" price and you as an individual should declare the cashback as income. In the latter case, the cashback is not a discount but a fee earned from the company. If you like it is your profit on selling the item.

If (b) then it would be sensible for the business to be charged the nett price.

The above takes no account of the complications arising from VAT accounting.

InsideInsurance

General_Grant wrote: »

If (b) then it would be sensible for the business to be charged the nett price.

This isnt possible as (a) its past tense so the transaction has already happened and (b) the cashback comes via a third party company (Quidco)

I am guessing you dont know how these sites work? They provide normal affiliate marketing links to companies but rather than keeping the marketing money for themselves, as most sites like MSE or other sites that rely on advertising revenue do, they instead give the person who made the click/ purchase a percentage of the money they've generated.

So the merchant pays Quidco for generating the sales and then Quidco pays you for having generated the marketing revenue.

bris

It's taxable in a way yes. However if you paid £100 for a hard drive and got £5 cash back then you should only put the hard drive through your books at £95. It's not free money, it should go back to your bank as if it was never spent, properly accounted for of course.

zygurat789

InsideInsurance wrote: »

This isnt possible as (a) its past tense so the transaction has already happened and (b) the cashback comes via a third party company (Quidco)

I am guessing you dont know how these sites work? They provide normal affiliate marketing links to companies but rather than keeping the marketing money for themselves, as most sites like MSE or other sites that rely on advertising revenue do, they instead give the person who made the click/ purchase a percentage of the money they've generated.

So the merchant pays Quidco for generating the sales and then Quidco pays you for having generated the marketing revenue.

Of course it's possible, all you have to do is credit the income to the same account the original purchase was charged to.

InsideInsurance

zygurat789 wrote: »

Of course it's possible, all you have to do is credit the income to the same account the original purchase was charged to.

But that isnt what the poster suggested, to use the example above they said that if its £100 with 5% cashback its better to be simply charged £95 rather than charged £100 and then paid £5 back.

As the transactions already happened its too late to get the merchant to agree to simply apply a discount up front. Secondly Quidco wouldnt be too happy if the merchant was going around trying to cut them out of the chain. Finally, in the companies I've worked for affiliate marketing including cashback came out of the Marketing budget and so not hitting the product/ commercial guys P&L where as an upfront discount would often come out of the other departments unless promo codes were used (which were hard to set up for a single one user discount)

zygurat789

InsideInsurance wrote: »

But that isnt what the poster suggested, to use the example above they said that if its £100 with 5% cashback its better to be simply charged £95 rather than charged £100 and then paid £5 back.

As the transactions already happened its too late to get the merchant to agree to simply apply a discount up front. Secondly Quidco wouldnt be too happy if the merchant was going around trying to cut them out of the chain. Finally, in the companies I've worked for affiliate marketing including cashback came out of the Marketing budget and so not hitting the product/ commercial guys P&L where as an upfront discount would often come out of the other departments unless promo codes were used (which were hard to set up for a single one user discount)

The poster suggested that the business should be charged the net price which is precisely what I said:-

Of course it's possible, all you have to do is credit the income to the same account the original purchase was charged to.

Thus charging the business the net price