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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.

Quick start guide to digital record-keeping

Recording Transactions Manually

  1. Click on the "Transactions" tile to start recording your income and expenses.
  2. At the top of the screen, click on the "add" button.
  3. Using the calendar, select the date.
  4. Input a transaction description.
  5. Optionally, assign a contact or business associated with the transaction.
  6. Choose a category; different sets of categories are shown based on your business type e.g. limited company, sole trader, UK and foreign property landlords.
  7. Select a transaction type, which is typically set to "business."
  8. Select a VAT rate if applicable.
  9. Enter the gross amount. The net amount will be calculated based on the VAT rate.
  10. Indicate whether this is a refund, and then click "submit."

Importing Transactions in Bulk

You can import transactions in bulk from spreadsheets and CSVs.

  1. From the "transaction" screen, click on "manage" and then "import."
  2. On the "import" screen, select "file import."
  3. Open the file chooser with "select a file."
  4. Select a spreadsheet or CSV; these could be bank transactions or financial records from other accounting software.
  5. Click the "upload" button.
  6. Itax Digital will attempt to map your file's data. At a minimum, your file will need date, description, and amount.
  7. Check that the preview looks good, and then click "submit."
  8. If you make a mistake, you can delete the import and start again.
  9. You will now see all your imported transactions on the "transactions" screen.

Download example transaction import template (XLSX)

Download example transaction import template (CSV)

Exporting and Searching Transactions

To export transactions:

  1. Click on "manage," then click "export."
  2. This action will download all your transactions to a CSV.

To search for specific transactions:

  1. Click on the "filters" button.
  2. Enter search criteria, which can include description, date, category, and amount.

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 income and expense category on the self assessment update form when in Accounting mode.

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)

Transaction Types

Business

Choose this option for income received from customers for goods or services sold or money spent in order to run your business. Amounts entered will be used to calculate figures for your VAT return and Self Assessment form.

Business (EU)

Choose this option for income from supplies of goods and related costs to EC Member States or expenses due to acquisitions of goods and related costs from EC Member States prior to 1st January 2021. From 1st January 2021 this option should only be used for businesses based in Northern Ireland. Amounts entered will be used to calculate EC supplies and acquisitions for your VAT return and for your Self Assessment form.

For sales to EC non-VAT registered individuals, Type: Business (EU) should only be selected if your yearly sales are in excess of the distance selling threshold and you are registered for VAT in that EC country otherwise you should select Type: Business. See HMRC VAT Notice 725 for further details.

Unreconciled

An income or expense which you have not yet reconciled against a bank transaction. The amount will not be used in the calculation of your VAT return or Self Assessment.

Disallowable

An income or expense which is not wholly and exclusively for your business or expenditure which HMRC does not allow you to deduct from your revenue. This amount will not be used in the calculation of your VAT return.

Personal

A personal income or expense which is not wholly and exclusively for the business and will not be used in the calculation of your VAT return or Self Assessment.

Margin Scheme

Use the Margin Scheme for second-hand goods, works of art, antiques and collectors’ items. See The Margin and Global Accounting Scheme (VAT Notice 718) for more details.

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.