If you subscribe to the business toolkit and start using our tax & VAT estimation tools, we’ll use the category of each transaction to decide the appropriate tax treatment:
- Anything categorised as ‘Revenue’ will count towards your taxable income
- Anything categorised in one of the ‘Expense’ categories will be captured as an allowable expense. The exception to this is ‘Entertainment’, which has been defaulted to non tax-deductible.
- Anything categorised in one of the ‘Personal Payment’, ‘Business Payment’ or ‘Tax Payment’ categories will be excluded from your taxable income.
- If you choose an ‘Expense’ category for an incoming payment, then we’ll assume it was a refund for an expense
- You can amend the allowable portion of the income or expense in either transaction details or the bookkeeping tool.
If you are VAT registered, you’ll still have to input any VAT details (e.g. VAT rate/amount, cross border VAT reporting, recoverable capital goods, etc) to make sure your VAT estimate is as accurate as possible.