Tax Withholding and Reserved Funds¶

Stop the stress of surprise tax bills. Doughsense helps you automatically separate tax money from your spending money, so you always know what's truly yours to spend.

Quick Start¶

Let's set up your tax withholding in under 5 minutes.

For Self-Employed Users¶

1. Create a Tax Reserve Account
2. Navigate to Portfolio → Add Account
3. Name it "Tax Reserve" or similar
4. Set type to Savings
5. Enable "Exclude from metrics" in Advanced Settings

6. Save the account

7. Configure Automatic Withholding

8. Navigate to Budget → Income
9. Edit your income source
10. Set withholding percentage (e.g., 30%)
11. Select your Tax Reserve account

12. Save changes

13. Result: Your income automatically splits, with only the net amount counting as available cash flow

How It Works¶

Account Exclusion¶

Think of excluded accounts as "invisible" to your financial metrics. They hold money that's technically in your possession but isn't really yours to spend - like tax reserves or money you're holding for someone else.

Common uses:

• Tax reserves
• Escrow accounts
• Funds held for others

Impact when excluded:

• Don't count toward portfolio calculations
• Don't appear in budget calculations
• Show separately in portfolio view
• Display with "(Excluded)" label

Income Withholding¶

Just like an employer takes tax from your payslip, Doughsense can automatically split your income - but you're in control of the percentages and destinations.

How it works:

• Income splits based on percentage
• Withheld portion goes to designated account
• Only non-withheld amount affects budget

Example: £5,000 income with 30% withholding

• £3,500 → Main account (available)
• £1,500 → Tax Reserve (excluded)
• Budget shows £3,500 as spendable

Setting Up Withholding¶

Step 1: Create Reserved Account¶

1. Add new account in Portfolio
2. Choose clear name (e.g., "2024 Tax Reserve")
3. Select account type (usually Savings)
4. Important: Enable "Exclude from metrics"
5. Save account

Step 2: Configure Income¶

1. Edit income source in Budget
2. Find "Withholding (Optional)" section
3. Enter withholding percentage
4. Select reserved account from dropdown
5. Save changes

Step 3: Verify Setup¶

Check that:

• Withholding account shows "(Excluded)" label
• Budget reflects only net income
• Portfolio shows excluded accounts separately

What Changes When You Use This¶

On Your Budget¶

• Only non-withheld amounts appear as available
• More accurate spending power
• Clearer financial planning

On Your Portfolio¶

• Net worth excludes reserved funds
• Liquid assets show true availability
• Visual separation of reserved vs. available

On Financial Projections¶

• Timeline uses only available funds
• Cash flow reflects actual spending power
• Runway calculations exclude reserves

Best Practices¶

Withholding Percentages¶

Self-Employed:

• Income tax: 20-45%
• National Insurance: 9-12%
• Buffer: 5-10%
• Total: 35-50%

Employees (for bonuses/side income):

• Bonus withholding: 40-45%
• Side income: 30-40%
• Investment gains: 20-28%

Account Organisation¶

Recommended structure:

1. Main Current - Not excluded (spending money)
2. Tax Reserve - Excluded (tax withholding)
3. Investments - Not excluded (net worth)
4. Escrow/Trust - Excluded (not your money)

Maintenance¶

• Review withholding quarterly
• Adjust for income changes
• Keep excluded accounts separate
• Don't use reserves for regular expenses

Common Scenarios¶

Freelancer with Variable Income¶

Setup:

• Average income: £5,000/month
• Withholding: 35%

Result:

• Available: £3,250/month
• Reserved: £1,750/month
• Accurate budget planning

Employee with Side Business¶

Setup:

• Salary: £3,000/month (employer handles tax)
• Side income: £1,000/month
• Side income withholding: 40%

Result:

• Total available: £3,600/month
• Automated side income tax handling

Year-End Bonus¶

Setup:

• Bonus: £10,000
• Withholding: 45%

Result:

• Available from bonus: £5,500
• Tax reserve: £4,500
• No surprise tax bills

Troubleshooting¶

"Withholding account not excluded" Warning¶

Solution:

1. Navigate to the withholding account
2. Enable "Exclude from metrics"
3. Save changes
4. Warning disappears

Withholding Not Reducing Budget¶

Check:

• Is withholding account excluded?
• Are percentages set correctly?
• Did you save all changes?

Can't Select Same Account¶

The system prevents circular withholding (target and withholding can't be the same account). Use separate accounts.

Advanced Tips¶

Multiple Income Streams¶

• Set different withholding per income
• Use separate reserve accounts if needed
• Consider combined vs. separate tracking

Quarterly Tax Payments¶

1. Build reserves with withholding
2. Make payment from excluded account
3. Account stays excluded (now empty)
4. Continue building for next quarter

Year-End Reconciliation¶

• Compare actual tax to withheld amounts
• Adjust next year's percentage
• Transfer excess to main account
• Keep records for reference

FAQs¶

Can I change exclusion status later?¶

Yes, edit account settings anytime. Changes apply immediately to all calculations.

What about employer withholding?¶

This feature is primarily for income not already taxed at source. Use for bonuses, side income, or self-employment.

How do excluded accounts appear in reports?¶

• Portfolio: Separate "Excluded Accounts" section
• Budget: Not shown at all
• Timeline: Not counted as available

Can I set expenses as a percentage of income?¶

No, expenses in Doughsense are fixed amounts only. To automatically separate a percentage of income (like for taxes), use the income withholding feature instead. If you need to use expenses for tax savings, you'll need to:

1. Calculate the amount manually (e.g., 30% of your income)
2. Create an expense for that fixed amount
3. Update the expense whenever your income changes

The automatic withholding feature is recommended as it handles percentage calculations automatically.

Key Takeaways¶

1. Separate reserved from available - Use account exclusion
2. Automate withholding - Set percentages on income
3. Review regularly - Adjust as situation changes
4. Keep it simple - One tax account usually sufficient
5. Don't touch reserves - Treat as locked until needed

Related: Managing Your Finances | First Steps | Freelancer's Guide