As a new business owner, it's important you understand how the provisional tax system affects your business.
In your first year of business, you can receive a significant tax deferral. Your first year's tax bill is, in some cases, not payable until 7 April the following year. For example, if you went into business in June 2024, assuming you have a March balance date, your first year's tax bill may not be due and payable until 7 April 2026, which is quite some time away. Your provisional tax for the following year may not be payable until May 2026.
But in 2026 both tax bills are due.
The first two tax bills you sometimes receive in business - terminal tax for the previous year and provisional tax for the current year - can be tough for new businesses. If you aren't aware of them, and if you don't plan for them, they can have a serious effect on cashflow in your business.
We believe it is vital that, six months into your new business, we prepare a simple tax plan for you so you have a general idea of how much tax will be payable and when. We can then programme the likely payments into your cashflow plans. This is better than waiting until the following year to find out your tax commitments.
The provisional tax system is complex but by managing your tax plan you can choose the best options to suit your business. The attached guide gives more detail.
|
|
|
