Costs and pricing
Part of How to model a franchise budget in England without guessing prices
VAT and rates tabs for a franchise budget template in England
Set up the VAT and business rates tabs of a franchise budget template for England: what to enter, which VAT is blocked and who decides rates relief.
Tax lines pull cash out on different dates from the costs they relate to. A quote marked plus VAT, a turnover threshold and a rates bill each follow their own rule. Give each its own tab in the workbook, with the rule, the evidence and the date to recheck written beside every figure.
What to take away
- Keep VAT and business rates on their own tabs, not buried in the entry-cost sheet.
- Record net, VAT and gross for every quote, with the supplier's stated VAT treatment.
- Track rolling 12-month taxable turnover against the registration threshold from the first month.
- Mark the costs where VAT recovery is blocked and keep the invoice behind every claim.
- Take the rates figure and any relief from the council's decision, not from a multiplier alone.
Why tax gets its own tabs
Separate tabs stop tax rules from being averaged into cost lines. Each rule has a different trigger: a supplier quote, a turnover test or a council bill. A reviewer can then see which lines depend on an adviser's answer and which depend on a published rate.
GOV.UK's business-plan guidance says a plan should include objectives, strategy, sales, marketing and financial forecasts. Keep the tax assumptions in the same file as that narrative, so a reviewer can see why a number exists and who confirmed it. The workbook then answers questions without the preparer in the room. Entry costs, payroll and fees sit elsewhere, in the way you model a franchise budget.
The VAT tab, one row per quote
Enter VAT as the supplier states it, line by line, and never add one rate across the sheet. HMRC's VAT rate guide states the current 20% standard, 5% reduced and 0% zero rates, with treatment depending on the goods or services.
| Field | What to enter | Check |
|---|---|---|
| Supplier VAT treatment | The rate as stated on the quote | Ask an adviser about recovery |
| Net, VAT, gross | Three separate cash fields | Gross is what leaves the bank |
| Registration test | Rolling 12-month taxable turnover | Registration is required once it passes £90,000 |
| Deregistration test | The same rolling figure | You can ask to deregister below £88,000 |
| Evidence | Quote number and date | Re-quote before commitment |
One quote shows how the three money fields relate. A property and fit-out line of £48,000 net carries £9,600 VAT, so £57,600 gross, backed by quote Q-2291 of 14 July 2026. These are illustrative figures, not a market price. The £57,600, not the £48,000, is the cash that must be available on the payment date.
VAT treatment by cost line
Net quote
- Franchise payments
- Supplier quote
- Property and fit-out
- Supplier quote
- Equipment and stock
- Supplier quote
- Systems and data
- Supplier quote
- Recruitment and launch
- Supplier quote
VAT
- Franchise payments
- Stated rate
- Property and fit-out
- Stated rate
- Equipment and stock
- Stated rate
- Systems and data
- Stated rate
- Recruitment and launch
- Stated rate
Gross cash
- Franchise payments
- Net + VAT
- Property and fit-out
- Net + VAT
- Equipment and stock
- Net + VAT
- Systems and data
- Net + VAT
- Recruitment and launch
- Net + VAT
Paste this header and one blank row into a new tab as comma-separated values, then copy the row for each quote:
Quote ref,Supplier,VAT treatment stated,Net,VAT,Gross,Recoverable,Adviser answer,Evidence date
,,,,,,,,
Where VAT recovery is blocked
Some VAT cannot be reclaimed, so those lines need their own marker. Recovery is normally blocked on business entertaining, on most cars, and on costs put to exempt or private use. Keep a valid VAT invoice behind every claim you make.
Add a recoverable column with three values: yes, no and ask adviser. A line marked no carries its VAT into the budget as a real cost. A line marked ask adviser stays open, with a decision date and a named person to close it, until the answer is on file.
Quotes that look cheap on a net basis can hide this. Other costs outside the headline figure often reach the budget only after the first invoice arrives, so check each quote's VAT line before it enters the total.
The business rates tab
Business rates need a tab of their own because the council, not the multiplier, decides the bill and the relief. Insert the council's actual business-rates figure and relief decision for the property, and keep the multipliers only as a cross-check on that figure.
England's small business rates multiplier is 49.9p in the pound for 2025 to 2026 and the standard multiplier is 55.5p. The small business multiplier applies below a rateable value of £51,000. Confirm both multipliers for your billing year before any figure goes into the forecast.
Small business rate relief is 100% on a rateable value of £12,000 or less, if that is the only property your business uses, and falls gradually from 100% to 0% between £12,001 and £15,000. GOV.UK says the local council decides eligibility. Record the decision, its date and any conditions attached.
| Input | Where it comes from | Mark as |
|---|---|---|
| Rateable value | The property's entry in the valuation record | Published |
| Multiplier | The council bill for your billing year | Confirm each year |
| Relief | The council's eligibility decision | Open until decided |
Keeping the tax tabs current
All time-sensitive inputs need refreshing before commitment, and the tax tabs are the first place they go stale. Give every row a refresh-by date and keep superseded rates on a change log rather than overwriting them, so the reviewer can see why the funding need moved.
When you copy the model for downside cases, check which tax dates move with a later opening. Then compare the gross cash needed on the new dates with the funding you have lined up under your financing route.
Tax cash also feeds the return measure. A VAT line you cannot recover raises the capital committed, which lowers any return on investment calculated on it. Settle the recoverable flag first, then run the return.
Before you act
- Add a VAT tab with net, VAT and gross fields for every quote.
- Enter the supplier's stated VAT treatment and ask an adviser about recovery.
- Track rolling 12-month taxable turnover against the registration threshold.
- Insert the council's actual business-rates figure and relief decision.
- Give every tax row a refresh-by date and an evidence reference.
- Compare the tax tabs against the fee models in your agreement.
Common questions
How should I handle VAT on entry costs?
Enter the supplier's stated VAT on every quote, because it is part of the gross cash you pay. Whether you can recover it depends on your registration status and on what each cost is used for, so record the decision beside the figure.
When must a franchise business register for VAT?
You must register once your rolling 12-month taxable turnover passes £90,000. Track the figure monthly from the first trading month so the date is visible well before you reach it.
Who decides business rates relief?
The local council decides eligibility, even though GOV.UK sets the conditions and thresholds. Until the council confirms its decision, treat the relief as an open item on the rates tab.
