Coconut Categorisation

Choosing which category to use in Coconut can be a bit baffling, so we have listed the categories that are available in Coconut, with some ideas of what types of transactions would go in each of them:

• Business Income
  • Income – Any income from customers or clients.
  • Reimbursements – Income received from a customer to reimburse expenses you paid on their behalf. (Make sure you also include the expense!)
  • Client Refunds – Refunds issued to customers.
  • Other Income – Any other types of income, such as bank interest or commission.
• Business Expenses
  • Materials – Consumable items related to sales, such as packaging materials.
  • Stock – Purchases of items you intend to sell.
  • Web Hosting – Website hosting costs.
  • Sub-contractors – People helping you deliver services/products.
  • Training – Courses related to your business. (See our separate FAQ on this!)
  • Business Accommodation – Overnight stays or work-related travel accommodation.
  • Fuel – Recommend using mileage claims instead of actual fuel costs.
  • Parking & Tolls – Include a note on the purpose (e.g. “client meeting”).
  • Travel – Public transport for business purposes.
  • Vehicles – Usually not applicable to most sole traders.
  • Insurance – Public liability and professional indemnity. (Medical, income protection and life insurance are not claimable.)
  • Rent & Workspace – Office or co-working space rental.
  • Utilities – Electric, gas, water etc. (Only if you rent office space.)
  • Venue Hire – Hiring venues for events or meetings.
  • Repairs – Business-related repair costs.
  • Equipment – Small equipment (typically under £100), e.g. keyboards, cables.
  • Phone – Only claimable in full if it’s a dedicated work phone.
  • Postage – Business-related postage costs.
  • Software – Business-use software subscriptions or purchases.
  • Stationery – Office supplies.
  • Subscriptions – Industry or business-related subscriptions.
  • Bank Fees – Monthly usage, overdraft or card fees.
  • Bank Interest – Outgoing interest charges.
  • Accountancy & Legal Fees – Professional advice and support.
  • Consultants – Operational support (not the same as subcontractors).
  • Marketing – Advertising, branding, promotional materials.
  • Equipment Hire – Short-term rental of tools or machinery.
  • Food & Drink – Strict rules apply: lunch is not claimable for sole traders.
  • Work Clothing – Uniforms with logos or safety gear only.
• Other costs
  • Donations – Charitable donations (not deductible for sole traders but included under Gift Aid on your tax return).
  • Entertainment – Client or prospect meetings with food/drink.
• Staff Expenses
  • Director Wages – Not relevant to sole traders.
  • Pension Contributions – Not included in the main return; we’ll review separately – but any payments can be coded here
  • PAYE/NI Payments – Payments to HMRC for staff (not self assessment tax).
  • Staff Wages – Wages paid to your employees.
• Tax Payments
  • CIS Tax Withheld – For construction workers under the CIS scheme.
  • Corporation Tax – Not relevant to sole traders.
  • Income Tax/NI – Self assessment tax payments to HMRC.
  • VAT Payments – VAT bills
• Other
  • Transfers – Internal transfers between your accounts in Coconut (not income or expense).
  • Capital Purchase – Large equipment (typically over £100). We’ll treat this correctly in your tax return.
  • Credit Card Repayments – Categorise repayments here (not included in tax return). Make sure individual credit card expenses are logged separately.
  • Loan Repayments – Also not included in your tax return, but use this to categorise them where relevant.
  • PAYE Income – If employed as well as self-employed, categorise PAYE salary here.
  • Personal – Non-business spending. Not included in your tax return.
  • Saving for Tax – Set aside money for your tax bill and track it here.
• Property Income and Expenses (for rental property businesses)
  • Domestic Item Replacements – Replacing furniture or appliances.
  • Mortgage Capital Payment – Capital portion of your mortgage (if separated).
  • Mortgage Interest – Interest portion (for mixed-use or commercial).
  • Mortgage Interest – Residential – Use if you have both residential and commercial properties.
  • Mortgage Payment – If you can’t split capital and interest, post the full amount here and we’ll handle it in the return.
• Sole Trader Drawings
  • Your Wages – Money you take out of the business.
  • Paying In – Personal funds transferred into the business.

Tip: You can also set up multiple income streams in Coconut and assign each transaction to the relevant one to help you track everything more clearly.