Categorising your transactions for tax is essentially your bookkeeping, and good bookkeeping is critical to making sure you pay the right amount of tax.
Depending on your plan, each month you get a free allowance for the number of transactions you can categorise for tax (we do this automatically for you if you have a business account connected to the app). This includes both income and expenses. You can see the details of your plan here.
At the start of every month, the app will reset your categorisation count to 0 and then any new transactions (including both income & expenses) will be counted for the current month only. For example, if you have exceeded the limit for January by x2 transactions, when you reach February this will be reset to 0, but your January count will still be over the limit.
It’s worth noting that you can upgrade & downgrade anytime, so if the limits on your current plan are normally fine but you have the odd month where you will exceed them - you can upgrade for that month and then downgrade again the following month.
How do I know what to claim?
When you use the Coconut app, it'll automatically try and categorise your expenses. You can recategorise them in the app if we get this wrong.
In the app, you also have a button "what can I claim?" that has some guidance about what you can and can't claim:
If you decide that what you've purchases isn't something you can claim, then just adjust the category - scroll to the bottom and tap "not a business expense" to mark it as a personal expense.
By default, Coconut will put all expenses in as tax-deductible (apart from entertainment, which isn't allowable for tax).