Split every invoice into the right pots
The January tax shock is caused by one habit: spending the gross invoice. On receipt, every invoice is really four amounts — the VAT you owe HMRC, the tax you'll owe at year-end, the pension you've decided to pay, and the money that's actually yours to spend. This tool does the split for you on every invoice. Copy the breakdown, move the amounts between your current account and the pots, done.
Invoice tax reserve splitter
Rough tax reserve % to use
Rules of thumb for self-employed sole traders. Rerun your annual tax calculator for the exact number for your income band.
- £20-30k profit: ~22% (basic rate + Class 4 NI).
- £30-50k profit: ~27%.
- £50-80k profit: ~33%.
- £80-125k profit: ~38% (higher-rate band + Class 4).
- £125k+ profit: ~42% (additional rate band kicks in; personal allowance tapered).
Limited company director? The split works differently — your invoices come into the company first, then salary + dividends come out. Use the Limited Company Take-Home Calculator for the extraction maths.
Three practical pot-setups
- Two pots: VAT (if registered) + Tax. Minimum viable discipline.
- Three pots: add a Pension pot. Treat pension as fixed.
- Four pots: add a Holiday pot — fund the cost of time off too.
Starling, Monzo Business, Tide and Mettle all support multiple "spaces" / "pots" / "savings goals" natively. See best business bank account.