New Self Assessment tax app for the self employedApril 6th, 2012 • 2 Comments
It’s Easter. And the first day of a shiny new tax year. And to coincide with the advent of 2012/13, a new iPhone app for the self employed has been launched. Now we don’t normally do app reviews here at Bitterwallet- we leave that to the geeky types- but as this one is about tax, we thought you might be interested.
Basically, the app, which has quirkily been named Earnest, claims to make record keeping easier for the thousands of small businesses in the UK, whose turnover is less than £73,000 so who only need to complete the three boxes assessment of their self employed income on their tax return- income, expenditure and profit (or loss).
In principle, the app is useful, and allows you to record income sources and costs (and link payments and receipts to contacts if you are using an iPhone 4S) and keep track of your running total profit for the year, together with your likely tax bill. The app also allows you to take a photograph of a receipt- handy in case you later lose said small piece of paper. It will also remind you about tax payment deadlines, including payments on account, if you tick the relevant boxes.
So does it work and is it actually HMRC compliant? Well, kind of. HMRC requires that you keep records for (almost) six years, but allows you to do so electronically provided you keep a back up. One would assume the data in the app is backed up if you sync your phone, but alternatively, you can email your records to keep another copy somewhere else. So far so good.
However, the app only currently allows you to take one photo per entry. HMRC’s guidelines specifically state that you must retain a copy of all the information on a receipt- the front AND the back. Also the email backup file does not include photos, and neither are photos taken within the app saved in your Photo album- you would be better taking the picture outside the app and then selecting to use a previously taken picture so that your photo will also be backed up when syncing.
The app also assumes you are working on a tax year basis- i.e your business year end starts on 6 April and finishes on 5 April, with no discernable way of changing this. Presumably because the simple tax and NI calculation couldn’t manage dealing with the bases of assessment. The payment on account reminders are also manual, so you need to know whether you need to make payments on account or not.
The income and expenses do not allow for grouping by type either- although you can import the emailed data file into excel and manually do so- meaning the app will give you the three boxes you need for your tax return, but not tell you how much you have spent on materials in total this year, for example.
All in all it is a very basic app, and would only really be of use to incredibly small businesses, with very few transactions in a year, where their business runs 6 April to 5 April, or anyone who (like me) is completely rubbish at keeping receipts. Mind you, you could just take a photo of the receipt if you couldn’t be bothered to download the free app, or if you have a non-fruity smartphone.
Still, Ed Molyneux, CEO and co-founder of FreeAgent, the company behind Earnest said “our hope is that very small businesses will receive the support they require from Earnest – and as they grow and start to require more in-depth features for their finances, their experience with the app will encourage them to ‘trade up’ to use FreeAgent”, their cloud accounting software that starts at £15 per month plus VAT. I suppose he’s up front about it then.
I take it you got a free subscription though since you’ve blatantly plugged the app for the guy. I assume that what was the point of this article? or have you started reviewing every new app that comes out? No? Didn’t think so
Trade up to something £15 a month + VAT – £180 a year + vat – I think I might find the free version to be sufficient!!