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Digital Record-Keeping

Digital record-keeping is a legal requirement for MTD. My Tax Digital provides a simple cashbook (Transactions section) to record your business finances. The core principle is that every financial transaction must be captured digitally with a date, amount, and category.

1. Adding and Categorising Transactions

All your income and expenses must be entered here. When you enter a transaction, you link it to a specific purpose, which automatically ensures it is reported correctly to HMRC for your VAT and/or Income Tax submissions.

  1. Navigate to Transactions: Select Transactions from the main menu (under the General section).

  2. Add a New Entry: Click the "+ Add" button in the top right corner.

  3. Enter Core Details:

    • Date: The date the money was received or paid (the tax point).
    • Description: A clear note for your records (e.g., "Invoice 123 for website design").

  4. Select Transaction Type: Choose the status of the transaction from the drop-down menu:

    • Business: Used for standard, allowable business income and expenses.
    • Margin Scheme: Used specifically for sales or purchases of second-hand goods, antiques, or works of art where VAT is only calculated on the profit margin.
    • Disallowable: Used for expenses that are paid by the business but cannot be claimed for tax purposes (e.g., personal clothing, entertaining clients).
    • Personal: Used for money taken out of (drawings) or put into (capital introduced) the business account for personal use.

  5. Select Category: Choose the specific category (e.g., Turnover, Cost of goods bought for resale or goods used, Wages and salaries).

  6. Enter Amounts: Enter the Amount and the correct VAT rate (if applicable). My Tax Digital automatically calculates the Net and Total VAT.

    • Tip: If the transaction is a refund, tick the Refund checkbox.

  7. Click "Update" (or "Save") to log the transaction.

2. Automatic MTD Submission Mapping

The great benefit of My Tax Digital's Accounting mode is that once you enter a transaction, the app automatically places the figure into the correct total for both your VAT and ITSA submissions.

Submission Type Transaction Figures Populate... Mapping Logic (If Accounting Mode is Selected)
MTD for VAT The nine boxes on your VAT Return (e.g., Box 1, Box 4, Box 6, Box 7). The VAT Rate and Transaction Type determine the box. For example, a transaction of type Business with 20% VAT goes into Box 1 (VAT due) and Box 6 (Net sales).
MTD for ITSA The cumulative totals in the Quarterly Updates for the selected income source (e.g., Company X). The Category (e.g., Turnover, Motor Expenses) automatically sums up over the quarter to populate the corresponding Income & Expenses tile totals.

HMRC Tax Form Mapping (ITSA)

The Category you select when adding a transaction maps directly to the required boxes on the annual HMRC Self Assessment forms (schedules).

App Category Group (Examples) HMRC Form Schedule
Turnover, Cost of Goods, Rent, Utilities, Travel SA103S/F (Self-Employment)
Rents Received, Property Repairs, Rent, Rates & Insurance SA105 (UK Property Income)
Foreign Tax Paid, Foreign Property Income SA106 (Foreign Income)

3. Margin Scheme Transactions

If you use the VAT Margin Scheme (e.g., for second-hand goods), you must record the purchase and sale separately to track the profit margin.

  1. Record Purchase: Create an Expense transaction with a Transaction Type of Business for the purchase price, setting the VAT Rate to 0%.

  2. Record Sale: When you sell the item, create an Income transaction with the Transaction Type set to Margin Scheme.

    • The app will use the difference between the purchase price (from the earlier expense) and the sale price to calculate the VAT due on the profit margin (16.67% of the margin), placing this small VAT amount into Box 1 of your VAT return.

Importing and Exporting Transactions

This section explains how to move your financial records into and out of My Tax Digital using a CSV (Comma Separated Values) file. This is particularly useful for quickly entering large amounts of historical data, or for creating a secure backup of your records.

1. Importing Transactions from a CSV

You can download your transaction history from your bank's website or export it from another piece of software as a CSV file and upload it here. This method provides the required digital link for your records when using Bridging Mode.

  1. Navigate to Import: From the main menu, select Transactions (under the General section), click on the Actions button, and then select "Import CSV".

  2. Upload File: Click "Select a File" and choose the CSV file you wish to import.

  3. Map Columns: The system will display the headings from your CSV file. Use the drop-down menus to accurately match your file's columns to the app's required fields (e.g., match your bank's 'Transaction Date' column to the app's 'Date').

  4. Review and Categorise: Once the file is imported, the transactions will appear in a temporary state. You must then go through the entries, confirm the correct Transaction Type (e.g., Business, Personal) and Category (e.g., Turnover, Motor Expenses), and assign the correct VAT Rate before they are permanently added to your digital records.

  5. Save: Click "Post" or "Save" to finalise the imported transactions.

2. Exporting Transactions (Backup)

You can download a full copy of your transaction history from My Tax Digital at any time. This is useful for creating a secure backup or for sending your data to a tax agent or accountant.

  1. Navigate to Export: From the main menu, select Transactions, click on the Actions button, and then select "Export CSV".

  2. Select Time Range: Use the fields to select the Time Range you wish to download (e.g., a full tax year).

  3. Export: Click the "Export" button.

  4. Download: A CSV file containing all your transaction data for the selected period will be generated and downloaded to your computer. This file includes all details, such as the date, description, category, and VAT amounts.

Contacts (Importing and Exporting)

The Contacts section allows you to manage the details of your customers and suppliers. Keeping these details up-to-date helps with E-Invoicing and record-keeping.

1. Adding a New Contact

  1. Navigate to Contacts: Select Contacts from the main menu (under the General section).

  2. Add Contact: Click the blue "+ Add" button in the top-right corner.

  3. Enter Details: Fill in the contact information, including the Name, Email, Phone (work), and Address (you can search or manually enter the address).

  4. Optional Fields: You can also enter the contact's VRN (VAT Registration Number), Website, and various social media links (LinkedIn, Facebook, etc.).

  5. Click "Submit" to save the new contact.

2. Importing Contacts from a CSV

You can quickly add multiple customers or suppliers by importing a contact list saved in a CSV file.

  1. Navigate to Import: On the Contacts screen, click the "Actions" button, and then select "Import CSV".

  2. Upload File: Click "Select a File" and choose the CSV file you wish to upload.

  3. Map Columns: The system will prompt you to match the columns in your CSV file (e.g., your file's 'Customer Name') to the correct fields in the app (e.g., 'Name').

  4. Click "Upload" to finalise the bulk import of your contacts.

3. Exporting Contacts (Backup)

You can download a complete list of your customers and suppliers for backup or to use in other software.

  1. Navigate to Export: On the Contacts screen, click the "Actions" button, and then select "Export CSV".

  2. Download: A CSV file containing all your recorded contact details will be generated and downloaded to your computer.