New research from Coconut, the smart accounting app for self-employed people, reveals that a fifth (17%) of sole traders and microbusiness owners overestimate their tax returns by an average of £722. With 5.3m of these businesses in the UK (according to ONS data), this equates to almost £650m that could be re-invested in their growing businesses throughout the year.
The research, highlighting the complexities and frustrations people feel when calculating their taxes, has been revealed ahead of Coconut launching the first tailored and fully automated tax-saving tool, called CoPilot, for self-employed people, due out this November.
Despite over half of respondents (63%) saying that doing their taxes should be as easy as sending an email, almost half (46%) still don’t fully comprehend all the different tax do’s and don’ts, and three in ten (30%) feel calculating how much tax they owe is the most complex part of running their business.
Over half (51%) of sole traders and microbusinesses admit that they don’t claim as much on expenses as they could do and worryingly, one in ten (11%) of respondents said they have borrowed money in the past to pay their tax bill.
For those who have been salaried or employed in the past, being in charge of your own taxes can seem an alarming change. Coconut’s new tax saving tool, CoPilot, uses Open Banking to make managing and paying your self-employed taxes as simple as PAYE.
Sam O’Connor, Co-Founder and CEO of Coconut said, “With huge advances in banking and app technology, tax doesn’t need to be a chore that gets left to the last minute.
We’re launching a new, automated tax-saving tool for customers this November, to take the stress and unnecessary frustrations out of doing taxes. We already provide a live, running tax estimate so business owners know exactly where they stand, and now we’re going a step further by helping them save the right amount of money to ultimately pay their bill.”
The new feature from Coconut will enable people to easily set money aside to pay their tax bill with a dedicated tax vault. By separating the money they need to pay their tax bill from their day-to-day business account and with the freedom to top-up or withdraw from it manually, Coconut customers will know exactly how much they have to reinvest in their business.
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