Monzo Tax Pots

What it is

A Tax Pot is a ring-fenced savings pot inside your Monzo Business account — you can have up to three — with one automation attached: every time money lands, Monzo moves a percentage you choose into the pot before you see the balance.

Set it to 20% and a £1,000 invoice payment arrives as £800 spendable plus £200 quarantined. The pot still belongs to you and you can raid it, but it takes a deliberate action rather than an accidental one.

How it actually works

• You choose the percentage. Most people use one figure covering VAT plus expected income tax or corporation tax.
• It skims from incoming payments, not from your balance, so it does not touch money that was already there.
• The pot earns the same interest rate as the rest of your Monzo savings — 1.30% AER on Lite and Pro, up to 3.25% on Team.
• Up to three Tax Pots, the number depending on your plan, so VAT, corporation tax and PAYE can each have their own rather than sharing one blended percentage.
• You can pay directly out of a Tax Pot. Set up a Direct Debit or standing order against it and Monzo moves the money into the balance and straight out again when the payment falls due.
• Movements appear in your main statement in their own section at the end.
• Nothing is filed or paid to HMRC automatically.

Who it genuinely helps

• VAT-registered businesses, where a fifth of every payment was never yours and the quarterly bill is large enough to hurt.
• People with lumpy income who would otherwise spend a good month and struggle in a bad one.
• Anyone who has ever been surprised by a tax bill. That is the entire market for this feature.

Where it falls short

• It does not file or pay anything. This is a discipline tool, not tax software.
• It skims gross, not profit. On a low-margin business a flat percentage can over-reserve badly and starve your working capital.
• It is behind Pro at £9 a month. Free Lite does not get it.
• You can still spend it. The friction is psychological, not structural.

What else does this

ANNA goes further: rather than a fixed percentage it maintains a live estimate of what you actually owe HMRC and updates it as money moves. That is a genuinely smarter version of the same idea — and it is on ANNA’s free tier.

Starling has Spaces, which do the ring-fencing without the automatic skim. Free, but you have to move the money yourself.

Mettle has pots with automatic tax rules and an in-app tax estimate, free, though within Mettle’s narrower account.

Any bank account plus a second account and a standing order achieves the same result with more friction and no cost.

Our verdict

Genuinely useful, not especially rare. The behavioural point is real — money you cannot see is money you do not spend, and unpaid VAT is one of the most common ways small businesses get into trouble. As a habit-forming device it works.

But it is a fixed percentage skim, which is the crudest version of this idea, and both Mettle and ANNA do something comparable or better without a subscription. If Tax Pots are the reason you are considering Monzo Pro, look at ANNA’s live tax estimate first — it costs nothing and answers the question more precisely.

Worth having if you are on Pro anyway. Not worth £108 a year on its own.

Read our full Monzo review →