At Coconut, making tax simple for self-employed people is at the core of what we do.
That’s why, for the new tax year, we’ve decided to make some key changes to our Tax tab—which we hope will make it significantly easier for you to find out how much of your earnings you should set aside for tax.
Get the numbers you need, faster
The goal of the tax tab is to provide you with an estimate of how much you should set aside for tax so you’re not caught out by a surprise bill. When you work with an accountant they would recommend setting aside a certain percentage based on your self employed income. We are now using the same ‘rule of thumb’ approach in the tax tab. This means you can now find out how much you should save for tax much more quickly and easily.
Here’s what you need to know 👇
Your 'set-aside rate'
In your Tax tab, you’ll now be able to specify your ‘set-aside rate’—the % of your earnings that you should set aside for tax—by selecting the band which reflects your expected self-employed profit for the tax year. Based on that, we’ll let you know how much you need to save to cover your tax bills.
If you have PAYE income, rental income, or a student loan, you’ll need to set a <custom rate> (we’ll show you how to do this in the app).
Tax savings suggestion
Your tax estimate is now called your ‘tax savings suggestion’, and it only relates to your self-employed income. The number is calculated based on the self-employed income and expenses you’ve categorised in the Transactions tab, and any adjustments and allowances entered in your Tax profile.
You don’t need to worry about your salary, rental income or student loan here—as we won’t take those into account for your tax savings suggestion.
Tax Return report
Similarly, the tax return report we will provide you with will still only relate to the Self Assessment portion of your tax return (SA103).
This report is now easier to access, and you can use the numbers you find in it to fill in your tax return ahead of the deadline in January.
Your PAYE income
If you’re getting your PAYE salary paid into one of the bank accounts you’ve connected to Coconut, you can still classify it as such, so we won’t include it in your total income.
All you need to do is categorise your transactions
These changes mean that you’ll be able to get to your tax savings suggestion much more easily; all you need to do is continue to categorise your transactions, just as you do already. That way, the number you’ll see will truly reflect your self-employment income and expenses, so you can share it with your accountant with confidence.
The changes will be coming live on iOS 1.54, so make sure to update the app.
Speaking of which: if you do have an accountant, you should still make sure you fill in your tax profile, so they can take all of that information into account when preparing your tax return.
If you have any questions and feedback on the changes, please don’t hesitate to get in touch!