Using Business Data for Tax Planning

AskBiz provides financial data and tools for business intelligence purposes. Nothing in this article constitutes tax advice. Tax planning decisions should always be made with a qualified accountant or tax adviser who knows your specific circumstances. Tax laws change frequently and vary significantly based on your business structure, industry, and other factors.

One of the most common small business tax mistakes is being surprised by a large tax bill because profits were not tracked during the year. AskBiz shows your estimated taxable profit in real time — so you always know roughly where you stand.

Go to Finance → Tax Planning → Estimated Tax Position to see:

• Year-to-date profit (based on AskBiz data — your accountant will make adjustments)
• Estimated Corporation Tax or Income Tax liability at current run rate
• Months remaining in your tax year
• Suggested monthly provision (how much to set aside each month to cover the tax bill)

Note: AskBiz's tax estimate is indicative only. Your actual taxable profit will differ from AskBiz's figure after your accountant makes accounting adjustments — discuss the final figure with them.

Capital allowances allow businesses to deduct qualifying capital expenditure from taxable profits in the year of purchase. If your AskBiz data shows you are heading for a profitable year, your accountant may recommend making qualifying capital purchases before your year end to reduce the tax bill.

AskBiz can help you identify the right timing:

1. Go to Finance → Tax Planning → Year End Forecast

2. See your projected taxable profit for the year based on current trading

3. Model the tax impact of a capital purchase (enter the amount and AskBiz estimates the tax saving)

Capital purchases to consider: equipment, technology, vehicles (subject to restrictions), leasehold improvements. Always confirm eligibility for capital allowances with your accountant before making a purchase purely for tax reasons.

Setting aside tax provisions monthly prevents the cash flow shock of a large tax payment. AskBiz calculates a suggested monthly provision based on:

• Your estimated annual taxable profit (from your AskBiz profit data)
• Your applicable tax rate (Corporation Tax at 25% for profits above £250,000; 19% for profits below £50,000 — adjusted automatically based on your entity type in Settings)
• Your payment dates (Corporation Tax is typically due 9 months and 1 day after your accounting year end; Payment on Account applies to sole traders and partnerships)

Go to Finance → Tax Planning → Monthly Provision to see your suggested monthly amount. Transfer this to a separate savings account each month — it prevents the money from being spent on operations and ensures cash is available when the bill arrives.

For owner-managed businesses (Ltd companies), how you extract profit from the business — salary vs dividends vs pension contributions — has significant tax implications that AskBiz can help you model.

AskBiz shows your current profit extraction method and its effective tax rate in Finance → Tax Planning → Profit Extraction. You can model alternative scenarios:

• Increasing salary (reduces Corporation Tax but increases Income Tax and NI)
• Increasing dividends (taxed at dividend rates, which differ from income tax rates)
• Pension contributions (fully deductible for Corporation Tax purposes; no NI; tax-free growth)

The optimal extraction strategy depends on your personal tax position, other income, and future plans — your accountant should advise. AskBiz provides the business profit data needed to make these calculations; the decision itself requires professional input.