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HEAD TO HEAD: Is BA Accelerating Business Amex or Capital On Tap Business Rewards the best Avios SME credit card?

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We have recently seen two new small business credit cards launching, both of which allow you to earn Avios.  But which is best?

Both cards seem to take advantage of a loophole in the EU interchange fee regulations which means that they do not apply to corporate products.  SME cards are now far more lucrative for issuers and we can expect to see more of them.  We can also expect to see issuers pushing the boundaries over what counts as a ‘small business’.  Sell a few things on eBay?  Got a ‘buy to let’?  This may soon be enough, although (at least for eBay sellers) it won’t be enough at present.

In the blue corner ….. BA Amex Business

This funky looking card launched in September:

BA Amex Business

The full name is the British Airways American Express Accelerating Business credit card, but I’ll stick with ‘BA Amex Business’.

You can apply, and find full details, on this page of the Amex website.

Interest rate information: representative APR 81.6% variable, including the £210 annual fee, based on an assumed credit limit of £1200.  The interest rate on purchases is 22.9%.

Here are the headline details:

Annual fee: £210

Sign-up bonus: 2,200 On Business points if you spend £3,000 within 90 days (this is equivalent to around 9,000 Avios if used for Economy flights, or 4,500 Avios if used for Business Class flights)

Earning rate:  1.5 Avios per £1 spent

Additional benefits:  An additional 0.5 On Business points per £1 spent with British Airways, an additional 3,000 On Business points if you spend £20,000 in a card year

Foreign exchange fee:  2.99%

If you don’t know much about British Airways On Business, my review is here.  The review includes a promo code for an extra 1,500 On Business points when you sign up.

The eligibility rules are complex. The On Business scheme requires you to have a VAT number in order to join.  This creates a de facto turnover minimum of £85,000 per year, and excludes charities and other businesses which do not charge VAT.

However, I spoke to American Express and they told me – in writing – that you can override this requirement by applying for the BA Amex Business credit card.  If you are accepted, an On Business account will be opened for you even if your company does not meet the VAT threshold.

This statement contradicts the application website, however, which says “You understand and meet the British Airways On Business requirements.”

You also cannot apply if your company is a travel agency, ticket brokerage firm or consolidator or your company has an existing corporate incentive agreement with British Airways, Iberia or American Airlines.

There are few other requirements to get BA Amex Business.  To quote:

  • The business has a current UK Bank or Building Society account
  • You/The business have/has no County Court Judgements for non-payment of debt
  • You are aged 18 or over
  • You have a permanent UK home address
  • You will pay the annual Cardmembership fee of £210

Basically ….. as long as you have a business bank account, you should have no trouble meeting the other criteria.

You can apply for BA Amex Business here.

In the slightly darker blue corner ….. Capital On Tap Business Rewards

The Capital On Tap Business Rewards Visa card launched last week.  It has replaced the two existing Capital On Tap SME payment cards and is a better product than both of the old cards.

It looks like this:

Capital on Tap Business Rewards visa card

You can apply, and find full details, on this page of the Capital On Tap website.  Don’t forget to use promo code headforpoints for a higher bonus – see below.

Interest rate information:  Your interest rate is based on your business profile and can be as low as 9.9% APR.  The standard interest rate for marketing purposes is 39.9% APR.

Here are the headline details:

Annual fee: £99

Sign-up bonus: £100 cashback or 10,000 Avios if you spend £5,000 within 90 days (this is increased to £105 cashback or 10,500 Avios if you apply using promo code headforpoints)

Earning rate:  1p cashback or 1 Avios per £1 spent

Additional benefits:  None

Foreign exchange fee:  None

The Capital On Tap cards are aimed at sole traders as well as small businesses.  The company appears to be flexible in who they accept:

if you are a UK limited company or limited partnership with turnover of £24,000+ then you should be eligible

if you are a VAT registered sole trader then you should be eligible. 

if you are a sole trader under the VAT threshold but above £24,000 then applications are looked at on a case by case basis – if you have a functioning website and are clearly in business then I am told you should be eligible

Applicants must not have a CCJ against themselves or their business in the past 12 months.

You can apply for Capital On Tap Business Rewards here.

Best Avios small business credit card

Which card comes out on top?

As usual, it isn’t as simple as that.  British Airways American Express Accelerating Business and Capital On Tap Business Rewards are not entirely comparable.

Let’s look at two key factors first:

BA Amex Business is, well, an Amex.  Capital On Tap Business Rewards is a Visa.  There is a substantial difference in the acceptance rate of Amex vs Visa in the B2B sector.  Even if you get the BA Amex Business card, it won’t be accepted everywhere.

BA Amex Business has a 2.99% FX fee.  Capital On Tap Business Rewards has no FX fees.  If you spend a lot of money outside the UK, this is a key differentiator.

For simplicity, though, let’s assume that a) 100% of your spending could be done with an Amex and b) you value an Avios at 1p, c) all your spend is in Sterling and d) your British Airways spend is nominal.

These calculations ignore the value of the sign-up bonus.

Annual spend of £15,000:

  • BA Amex Business – £210 fee offset by 22,500 Avios earned (£225-worth), net gain of £15
  • Capital On Tap – £99 fee offset by £150 cashback or 15,000 Avios earned (£150-worth), net gain of £51

Annual spend of £25,000:

  • BA Amex Business – £210 fee offset by 37,500 Avios earned (£375-worth) PLUS the annual bonus of 3,000 On Business points (equivalent to 12,000 Avios of value) for a net gain of £285
  • Capital On Tap – £99 fee offset by 25,000 Avios earned (£250-worth), net gain of £151

Annual spend of £50,000:

  • BA Amex Business – £210 fee offset by 75,000 Avios earned (£750-worth) PLUS the annual bonus of 3,000 On Business points (equivalent to 12,000 Avios of value), net gain of £660
  • Capital On Tap – £99 fee offset by 50,000 Avios earned (£500-worth), net gain of £401

As you can see, for higher spenders the BA Accelerating Business card becomes more attractive – on paper.

In reality, I’m not sure the numbers above mean much because of the issue of Amex acceptance amongst B2B suppliers.  Capital On Tap, in the real world, will perform better because Visa credit cards are accepted more widely.

The 3% FX fee also cuts the Amex return sharply.  In the £50,000 annual spend example, if just £10,000 of that spend was in foreign currencies then the £300 FX fee incurred would wipe out the additional rewards and leave Capital On Tap on top.

In Year 1, Capital On Tap is also a no-brainer even if you get BA Amex Business for the long term.  As long as you use the headforpoints promo code, you’re getting £105 cashback or 10,500 Avios for the £99 fee.

Conclusion

Both BA Amex Business and Capital On Tap Business Rewards have something to offer small businesses.

In general …..

Small spenders may do better with Capital On Tap, larger spenders may do better with BA Amex Business

Those with lots of overseas spend may do better with Capital On Tap, those with mainly UK spend may do better with BA Amex Business

Those with lots of suppliers who do not take Amex may do better with Capital On Tap, those with a lot of Amex-friendly spend (hello, heavy Google Adwords and Facebook advertisers) may do better with BA Amex Business

Those with substantial British Airways spend may do better with BA Amex Business due to the bonus On Business points

You can apply for the British Airways American Express Accelerating Business card here.

You can apply for the Capital On Tap Business Rewards Visa here.  Don’t forget to use the headforpoints promo code for your extra £5 / 500 Avios sign-up bonus.

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Comments

  1. You can have a VAT number with zero turnover.

    So that should be no problem.

    • Exactly. My one man software consultancy has a VAT number and I haven’t even started trading.

      • Why would you do that? You will have virtually no reclaimable VAT as a software business and now have to whack up your price by 20%.

        • You think a software consultancy business has a lot of non-VAT registered clients?

          • Depends who your target market is. Irrespective, with naff all to reclaim the hassle of the paperwork every quarter doesn’t seem worth it. Remember you prepay too – the VAT is due as soon as you invoice, irrespective of when you get paid. HFP currently has a five figure sum of VAT which we have paid to HMRC but has yet to come in from the client due to slow payment.

          • Mr(s) Entitled says:

            What do the clients matter?

          • Looks like Rob has given you two your first lesson in business!

        • I actually spend a lot on cloud solutions. I’m also thinking of getting into machine learning, which also requires a lot of expensive hardware.

          And surely everytime I have to go to the customers office all the costs I incur are VAT reclaimable?

          • What costs? Public transport has no VAT on it. You can reclaim VAT on petrol.

            Also note that most of your IT costs will be to non-UK companies so there is no VAT to reclaim! Let me put this in perspective. Last quarter HFP reclaimed £1,025 of VAT. Of that, £890 was in relation to our WeWork office. If we all worked from home, the VAT reclaim would have been just £135 for the full quarter. Given that it takes me six hours to do each VAT return and I am permanently five figures out of pocket due to prepaying HMRC for VAT on unpaid invoices, it is not something I do voluntarily I promise you!

            All of these costs we have do not incur VAT: IT back-ups, Mailchimp for HFP emails, Rhys and Sinead, Facebook spend, Google spend, Cloudflare, flight tickets, all spend abroad whilst travelling for HFP, our competition software, rail, tubes, media, our FCA fee, taxis etc.

        • I also work a lot from home, so I can reclaim VAT on utility bills on the % of the floor space that is my “office”

          My accountant told me that there’s a lot I could possibly reclaim, so I registered.

          • Mr(s) Entitled says:

            But you are claiming vat on costs only to then add Vat to sales. Unless you plan on costs being a higher £ than sales (not advisable if you want profit) are you not losing out? Not having vat is a chance to undercut those that do by 20% without harming margin.

          • VAT on utility bills is only 5%. The reclaim is miniscule. You get 95% of the benefit regardless of whether you register for VAT.

            We seem to pay £238 per month to Bulb for our energy. Our office, which I use in the evenings and weekends for HFP, is around 5% of floor space. I am therefore 50p per month better off because I am registered for VAT (our revenue is over £85k so I have no choice) – ie 5% of 5% of £238. Not exactly a good reason to register for VAT!

          • “My accountant told me that there’s a lot I could possibly reclaim, so I registered.”

            So did I back in the nineties. He soon vanished when I had a tax investigation and had six years of his “Tax allowable benefits” disqualified by the taxman.

            Not worth the aggro until you need to register.

        • There is one potential upside of voluntarily registering for VAT which is often over-looked if your customers are businesses who can reclaim the VAT- it can make you seem like a bigger / more successful business. If you’re not VAT registered you by default have turnover under £85k, which might make some businesses worry that you’re either not successful or that you’re a start-up and don’t have a track record, both of which may give them concerns about your ability to still be around in a few months time to continue supporting them.

          However, if your customers are consumers, such concerns are much less likely to be a factor when compared with making a saving of 20% on the costs they will pay.

        • Ken Tinsley says:

          Rob, you bang this drum frequently but you miss the following.

          Many business are exclusively business to business & standard rate.

          If you get paid quickly or straight away being Vat registered is cash positive, particularly if you are on quarterly accounting.

          VAT return isn’t particularly onerous and to be honest forces people to keep decent records.

          Most importantly, if your argument is that you have few inputs to reclaim then you would opt for the flat rate scheme. I know small businesses that make a profit of more than £3k a year out of the flat rate scheme.
          It doesn’t take them 6 hours a month.

          • Ken Tinsley says:

            it doesn’t even take them 6 hours a quarter either !

          • I bet their accounts don’t have 101 income streams feeding in, however!

          • Changes to the flat rate scheme a couple of years ago no longer make it worth the while to be on it. I switched to the normal scheme as a result. Bye-bye and extra £3k p.a. “income” 🙁

        • Totally depends on the business @Rob.

          Chrisasaurus’ businesses sounds like one of mine, where:

          – All sales are to VAT-registered businesses, or outside scope (intl)
          – There might not be loads of purchases, but the occasional stationery, petrol, computer/iPhone every few years, is non-zero and adds up
          – (minor for me but I know more major for others) Being VAT-registered looks good to clients
          – Either cashflow isn’t an issue because margins are high so you have plenty more cash in bank than your VAT bills…
          – …Or otherwise just switch to cash accounting where you don’t pay HMRC until you get paid
          – The “additional paperwork” takes under 60 seconds

          At which point I would absolutely be registering for VAT from day 1, even just to reclaim the £5 of VAT on my initial stationery outlay (before even thinking about the computer purchase). No brainer. Many in this community jump through many more hoops to get £5 of Avios in some small promotional offer 🙂

          If your VAT takes 6 hours then I agree, you have more of a cost-benefit tradeoff to consider. But VAT here is a 60 second task each quarter of log in to Freeagent, check nothing is missing, press Submit

          • If VAT takes you 6 hours a quarter then you need to look at what your doing throughout the quarter, also why would you be filling in boxes this is nearly 2020. I can do 7 figures in sales and the VAT is already calculated for me at the end of the quarter in the accounting software, the only thing I need to do is submit my login details.

          • We don’t use accounting software, we run off Excel, and we do nothing during the quarter! You need to remember we have a complex mix of VATable UK revenue, nonVATable UK revenue, EU revenue and non-EU revenue. We’re not a one-man consultancy sending out three invoices per quarter to UK companies.

  2. memesweeper says:

    How many supplementaries can you get on the BA card? COT allows up to 99 for employees, which is pretty good if your business has that many employees you trust.

  3. Rooster says:

    I would only deal with Amex, I don’t consider COT to be reliable based on my experience, hope this doesn’t get deleted…

  4. William Portlock says:

    The old MasterCard capital on tap allowed you to pay the following without a fee

    1 Tax – Paye and corporation tax
    2 VAT
    3 Pension payments
    The new visa card addition will mean the tax office will charge you a whopping 2.5% for tax and VAT payments and no pension providers, well certainly the ones we use. will even allow payment by Visa or othe credit cards

    So the new card not worth it for me especailly as i earn 1.5 avios on my BA card and use that with lots of suppliers

    I can understand why capital on tap switched from the Current MasterCard version

    Does anyone know of a similar debit card i can pay VAT tax and pensions without fees?

    • Rooster says:

      Just Curve

    • The Savage Squirrel says:

      Indeed. Curve + COT is not so far in cost from BA. with up to an additional 50k (more for a few) of HMRC spend on COT that goes through Curve every year that you wouldn’t get with Amex, the maths changes yet again. It’s going to depend very much on individual situations which is better, but as Rob suggests, with HMRC/Curve and google being notable examples, the COT may perform a lot better in the real world.

    • Czechoslovakia says:

      NEST refused to play ball with CoT M/C. The only place that persistently declined. Never got to the bottom of it, just “computer says NO”.

  5. OT – £10 back with £50 spend at supermarkets are back on some of my cards.

    • The Streets says:

      It will be interesting to see if two offers on the same Amex card come off at the same time?! I’ve got this and the spend £20 or more and get 5% back at Waitrose

  6. KBuffett says:

    Has anyone noticed the new icon on some of the retailer logos on the shopping BA site (eg on the top right of the Apple logo)? Does it mean these retailers award the Avios faster than others?

  7. FXNeeded says:

    OT: IHG CREATIIN CARD & purchasing foreign currency.

    Hi, can I purchase foreign currency from the likes of M&S or John Lewis using the IHG creation credit card (premium) ?
    Will it count as a purchase ?
    Will it count towards the £10k spend for the night voucher ?
    Will there be an additional charge for the transaction ?

    IF I front it with a Curve card (the legacy black version) how does that change things ?

    Thanks ever so much.

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