Why you need to complete your tax profile in Coconut for a more accurate tax estimate
Nobody likes getting bills out of the blue! Especially not tax bills that turn out to be miles off the amount you’d been budgeting to pay.
We want to help you plan ahead and avoid any unwelcome surprises.
So the Coconut app gives you a tax estimate. A personal tax estimate for sole traders, and a corporation tax estimate for limited companies.
But remember, your tax estimate is only as accurate as the information we have for you.
Two key things affect its accuracy: your transaction categorisations, and the information in your tax profile.
Your tax profile is where we ask you about the factors that influence the amount you owe HMRC beyond your daily banking ins and outs. Maybe you have income or expenses that aren’t captured in Coconut? Or if you’re a sole trader, a student loan or previous employment we need to know about?
Unlike your financial data from a Coconut card or connected account, we don’t have access to these extra details, which means we can’t pull them in for you automatically.
That’s why it’s important to complete your tax profile and keep it up to date as your situation changes over time. That way we can give you a more accurate (and useful!) tax estimate.
Some pieces of information you’ll be able to fill in right away, whereas some might need a little digging. We promise you though, the housekeeping is worth it for peace of mind! And once you’ve added any extra details, you’ll be able to see your updated tax estimate right away.
How to complete your tax profile
- In the Coconut app, go to the ‘Taxes’ tab
- Tap into ‘Tax profile’
- Check that your details are present and correct. You’ll most likely need to fill in some information for one or more of the things in the list below. (The app will guide you through it.)
- If you’re not sure about what to put, get in touch with our support team through the in-app chat or email [email protected] We’re here to help!
What details we ask for and why
For sole traders and limited companies:
Self-employed income and expenses not captured in Coconut
Do you have any income and expenses that aren’t captured in Coconut? For example, in an old (closed) bank account, or some other account that’s not connected to Coconut, or cash payments? It’s really important to add these totals here, or your tax estimate will definitely be wrong!
Keep in mind, you don’t need to add any income or expenses from a connected account. If you do, it’ll be factored in twice.
For sole traders only:
Did you leave a permanent role at some point within the tax year? This needs to be factored into your tax return. The income you earned counts towards your personal allowance, and you’ll probably have paid some income tax or National Insurance through Pay As You Earn (PAYE) too.
Got a student loan that’s not yet paid back in full? Your loan repayments for the year will be calculated when you submit your tax return, and this figure is factored into the total amount you owe HMRC.
(Not sure if you’re on repayment plan 1 or plan 2? See the guidance from gov.uk.)
Are you a landlord, or do you sublet a room? Your rental income needs to be factored into your tax return too. Make sure you enter your gross rental income before any deductions, as well as all your allowable expenses in this area.
(Not sure what’s allowable when it comes to the costs of letting a property? See the guidance from gov.uk.)
Adjusted personal allowance
At the time of publishing this article (April 2020), the standard amount you can earn tax free per year is £12,500. Have you been given a different figure by HMRC? We need to know so we can use the right number in your tax estimate calculation.
For limited companies only:
Year end date
When is your company’s year end date? We get this information from Companies House when you sign up, but you may have changed it to a different period. Whichever is the case for you, it needs to be reflected accurately in Coconut for a more accurate estimate of your corporation tax.