Access for the price of a coffee
We aren't kidding when we say that access to your Personal SAP Sandbox™ can cost as little as a daily coffee. Although the facts and figures will differ by country, and tax position, the basic maths and approach is the same in most places.
We got someone to do the sums for us and this is what it looks like for a UK higher rate tax payer:
SID Annual Membership is £1,200 plus 15% VAT per year.
You have access to the system for 365 days.
The net price can end up being £1.75 per day.
So how does this all breakdown?
Effect of VAT
If you are registered as a company for VAT purposes you can offset your input tax against your output sales tax. Therefore you can reclaim this VAT meaning that the cost to the company is:
£1,200.00 / 365 = £ 3.29 per day
Effect of Corporate Tax
This cost is deductible before corporation tax as an allowable business expense. So it would be net of the minimum 21% corporate tax (small business rate). Assuming that this £1,200 had been retained as profit it would have been subject to this tax and would only have been £948 net after the tax was deducted (at best).
So now the daily cost is effectively:
£948.00 / 365 = £ 2.59 per day
... its getting lower ...
Effect of Dividend Disbursement
If as a limited company retained profits are paid out as dividends then this £948 would be further subject to personal taxation. For those of you earning above the threshold for base rate of tax (which is £37,400 for 2009-10; plus your allowances). This dividend tax rate is 32.5%.
If you fall into this bracket the £948 is thus reduced to £ 639.90; making the effective daily cost to you of your company's provision of this tool:
£ 639.90 / 365 = £1.75 per day.
So this is why we say with certainty that this is how SID can provide access to an SAP system for the "Price of a Latte"!
In a recent blog on the SAPContractors website one of our members did his own comparison - to that of his daily sandwich. Regardless; whether you prefer coffee, sandwiches or a hot chocolate we think that this is a good deal.
Remember these calculations are based on the UK Tax regulations applying to UK based companies and personal tax payers.
Obviously the calculations will be different in different countries - as will the cost of your daily coffee.
So this is how SID membership costs you less than £2 per day.
But don't stint yourself - still take time to have a good coffee, or a nice cup of tea and a biscuit !
BTW This one was very nice indeed, thanks for asking.
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