To create a custom category, just tap on the 'Spending' tab from the bottom nav bar, then making sure you're on the 'Your spending' section just tap on 'Edit Custom Categories'. You'll be able to add a new custom category or manage the ones you've set up.
When setting up a category, you can choose it to be either a 'Spending' or 'Income' category. If you select 'Income', any transactions within the category aren't included as spend. Once created, Snoop will then prompt you which transactions or merchants you would like to be categorised within it.
You can also create a new category by tapping a transaction, tapping the current category box to re-categorise, then select the option to create a new category.
It's worth mentioning that on the free version of Snoop you can only create three, whereas with Plus you can create as many as you like!
Snoop Plus is available for £4.99/month or £39.99/year.