Because the tax on sellers raises the cost of producing and selling the good, it reduces the quantity supplied at every price. The supply curve shifts to the left. The equilibrium price rises and the equilibrium quantity falls. Once again, taxes reduce the size of the market.

The law of demand states that, other things remaining the same, if the price of a good rises, the quantity demanded of that good decreases; and if the price of a good falls, the quantity demanded of that good increases. 3.

The effect of the tax on the supply-demand equilibrium is to shift the quantity toward a point where the before-tax demand minus the before-tax supply is the amount of the tax. A tax increases the price a buyer pays by less than the tax. Similarly, the price the seller obtains falls, but by less than the tax.

The tax incidence depends on the relative price elasticity of supply and demand. When supply is more elastic than demand, buyers bear most of the tax burden. When demand is more elastic than supply, producers bear most of the cost of the tax. Tax revenue is larger the more inelastic the demand and supply are.

If the government increases the tax on a good, that shifts the supply curve to the left, the consumer price increases, and sellers’ price decreases. A tax increase does not affect the demand curve, nor does it make supply or demand more or less elastic.

A comprehensive study shows no correlation between taxes paid by large corporations and prices paid by consumers in that same state.

A rise in VAT to 25% causes a pivotal inward shift of the supply curve and if demand is price inelastic, suppliers will then be able to raise price without a big loss of sales. However some firms will choose to keep their prices lower in an attempt to gain market share. This depends on how profitable they are.

You must account for VAT on the full value of what you sell, even if you: receive goods or services instead of money (for example if you take something in part-exchange) haven’t charged any VAT to the customer – whatever price you charge is treated as including VAT.

The standard rate of VAT in the UK is 20%, with about half the items households spend money on subject to this rate. The lower rate also currently applies to sanitary products, although in the March 2020 Budget, the government announced it will stop charging VAT on these goods from 1 January 2021.

The temporary 5% reduced rate will come to an end on 30 September 2021 and will then be replaced with a 12.5% reduced rate that will be effective until 31 March 2022: both will apply across the UK.

From 1st March 2021, VAT-registered subcontractors will no longer charge VAT on certain construction services to another VAT-registered business. Instead, the customer will ‘self-account’ for any VAT due – this is known as the Reverse Charge.

20%

The reduced rate of VAT will apply to: hot / cold food and non-alcoholic beverages for consumption on the business premises, for example, cafes, restaurants and pubs. Cold takeaway food continues to be subject to VAT at 20% or 0% under the existing rules. hot takeaway food and hot takeaway non-alcoholic drinks.

To summarise: The VAT for all sales of food and drink consumed on the premises is reduced from 20% to 5% until January 12th 2021 – excluding alcoholic drinks which stay at 20% VAT. All other sales – including cold drinks and snacks, such as confectionary – remain at 20%.

The 5 per cent reduced rate of VAT will apply to food and non-alcoholic drinks sold for on premises consumption in restaurants, pubs, bars, and cafés. It will also apply to hot takeaway food and hot takeaway non-alcoholic beverages for consumption off the premises.

VAT on gifts to customers Another option is not to recover VAT on the gift cost and the business will not require to account for output VAT. Gifts for VAT purposes can include food, drink, tobacco or an exchangeable voucher.

Entertaining employees: VAT The cost of entertaining employees as a reward for good work, or to boost office morale, is classed as staff entertaining, which is allowable for tax relief and on which you can reclaim any VAT you pay.

If you give business gifts in the course of your trade or business, you can deduct all or part of the costs subject to the following limitations: You deduct no more than $25 of the cost of business gifts you give directly or indirectly to each person during your tax year.

Employee gifts VAT is reclaimable on the cost of an employee’s gift.

Gifts below $300 are a tax deductible expense providing they are classified as a ‘non-entertainment’ gift. The same rule applies for other special occasions such as birthdays. As long as these gifts are ‘infrequent’, you can claim a tax deduction for amounts of less than $300 for employees and there is no FBT.

Aim to spend $100 or less for employee gifts. If you have more than one employee, spend the same amount of money on each person during the holidays. Exceptions to this rule include gifts for a personal assistant, personal secretary, retirement, achievement or an award.

Gifts For Employees Working At Home

• 1) Happy Hour Box.
• 2) “Stay Comfy” Swag in a Box.
• 3) Home Office Essentials Box.
• 4) Virtual Clue Murder Mystery.
• 5) The Tech Pack.
• 6) Hydroponic Self-Watering Planter.
• 7) Asobu Coffee Compact.
• 8) Sips + Snack Box.

The 30 Best Christmas Gifts for Employees

1. Gift Cards. Gift cards have always been the top choice of every corporate gifting solution.
2. A Christmas Gift Hamper.
3. Books.
4. Personalised Coffee Mugs.
5. Family Board Games.
6. Noise Cancelling Earphones.
7. A Chocolate Gift Box.
8. Personalised Notebooks.

Generally, you should consider giving a Christmas gift to your employee if you can afford to give a similar gift to all your employees, the gift is genuine enough that your employees will be grateful for it and it is appropriate for the gift receivers.

13 inexpensive gift ideas for coworkers 2019

• EcoMoist Screen Cleaner and Microfiber Cloth.
• Ladybug Desktop Vacuum.
• Mini Cactus Humidifier.
• Moleskine Classic Notebook with Hard Cover in Sapphire Blue.
• Tea Forté Loose Tea Starter Set.
• Women’s Knit Fingerless Gloves.