Hello all, first time posting here. Apologies if this feature has been discussed before.
I’m self employed and use Monzo as my business account, and have been happy with the service.
I bill my clients by monthly invoice, and each time an invoice is paid I set aside VAT, and then calculate how much to set aside for 19% (for now) corporation tax. I set these amounts aside in pots in my account.
When I heard that Monzo included a “Tax pot” feature I was excited as this would automate this for me. However I have found the feature to be unfit for purpose. Firstly, I pay two forms of tax (VAT and Corp tax), so being limited to a single tax pot isn’t helpful. Secondly, setting aside a single percentage per invoice would only work if I didn’t charge VAT.
Instead what I would need to do is either have the Monzo app know the amount of my invoice before and after VAT (perhaps better integrating with FreeAgent) or to be able to calculate the reverse VAT by diving the invoice amount by 1.2, then setting this aside for VAT and calculating the corporation tax due on the pre-VAT amount.
I can’t be the only business who charges VAT on invoices and wishes to set aside the correct amounts. I’d be keen to see if Monzo are looking at improving the Tax pot feature.