Spending categories that suit your needs
If you want to re-categorise a transaction, for example if you’ve bought some stationary from Waterstones and want to change the category from ‘Other’ to ‘Admin’, you can update the category in a few taps. You can do this from the Starling app or through Online Banking.
You can even apply a category to all past and future transactions for any given supplier or merchant - just tap on the transaction category and select ‘Apply to all past and future transactions’.
Calling all Toolkit subscribers
Starling’s Business Toolkit keeps your bookkeeping and banking in one place. It costs £7 per month and has been designed to save you time and effort when preparing your tax return and organising your invoices.
If you’ve subscribed, the categories you select are especially important because they impact your VAT calculation and Tax estimations.
Here’s how the categories are organised:
Income: any form of revenue, which will count towards taxable income for VAT and tax.
Expenses: any business related expenses. These are allowable expenses - you can deduct them from your taxable income - except for ‘Entertainment’, which is non tax-deductible by default. The tax allowable portion of expenses, which can be manually changed in bookkeeping, will feed into the VAT calculations and tax estimations.
Tax payments: payments made to HMRC for VAT, Corporation Tax or Income Tax.
Business payments: for transfers between your business accounts, capital invested or borrowed. As these aren’t expenses, they are excluded from your tax and VAT calculations.
Personal payments: these are excluded from tax or VAT calculations as they’re made to or from yourself, other shareholders, or directors for personal purchases, reimbursements or dividends.
Running your business from home
If you’re self-employed and work from home, you’ll be able to expense some of the costs associated with your working space. There are a number of ways to calculate your cost of working from home, for example the square footage of your home office or the number of hours worked. You can find out more about these simplified expense methods on the government website.
If your home bills (e.g. electricity, rent) are paid through your Starling business account then the ‘Workplace’ might be the most appropriate category.
If you have the Starling Business Toolkit, you can then adjust the allowable tax amount for those transactions in Bookkeeping to reflect your cost of working from home, based on the simplified expense method.