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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

My Tax Digital Transactions

  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."

Transaction display order: Transactions are always displayed in date order, not the order they were entered. You do not need to enter them chronologically.

Opening bank balance: To record a starting balance (so the app balance matches your actual bank statement from the point you started using My Tax Digital), add a transaction with category Balancing Transaction and type Personal. This category is excluded from VAT returns and tax calculations.

General-purpose categories — excluded from all submissions: The Bank Transfer, Balancing Transaction, and Other categories have no mapping to any HMRC field. Transactions in these categories are excluded from all VAT and ITSA calculations and will never appear on a tax return. Use them for internal record-keeping only (e.g. transfers between your own accounts, opening balances, or entries you have not yet categorised).

Default category: The transaction form always opens with Turnover selected as the default category — there is no way to change this default. If you regularly need to record many transactions of the same category (e.g. travel expenses), the CSV bulk import is a more efficient approach: pre-fill the Category column in your spreadsheet and import the whole batch at once via Transactions > Manage > Import. See Import Reference below for the exact values to use.

My Tax Digital Transaction Detail

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.

Bank statement imports: Many banks (e.g. Starling) export a column called "Transaction type" containing values such as "ONLINE PAYMENT" or "CARD SUBSCRIPTION". Do not map this to our Transaction type field — it expects an MTD classification, not a banking descriptor. Leave the Transaction type field unmapped and categorise transactions individually after import, or replace the column values with one of the accepted values: Business, Business (EU), Personal, Disallowable, Unreconciled, Margin Scheme, or Ignore. For most business bank transactions, Business is the correct choice.

Download example transaction import template (XLSX)

Download example transaction import template (CSV)

Recurring expenses: My Tax Digital does not currently have a recurring or repeating transaction feature. If you have regular fixed costs (insurance, software subscriptions, etc.), the recommended workaround is to add all instances to a CSV and import them in bulk each quarter. Open Banking integration is planned for a future release, which will allow direct bank feed imports.

Attaching Receipts and Files

You can attach receipts, invoices, or other supporting documents directly to a transaction.

  1. From the Transactions screen, click on a transaction to open it.
  2. Click the Attachments section and then the + Add button.
  3. Select a file from your device (e.g., a photo of a receipt).
  4. Enter a Description for the file.
  5. Click Submit to save the attachment.

My Tax Digital Add Attachment

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.

Import Reference: Transaction Types and Categories

When importing transactions via CSV or spreadsheet, the app will attempt to automatically map common Transaction type and Category values from your file. If a value is not recognised and not mapped automatically, use the exact values listed below as a fallback (capitalisation and punctuation must match exactly).

Transaction Types

Value Used for
Business Standard business income or expense — included in VAT and ITSA calculations
Business (EU) EC supplies and acquisitions (Northern Ireland businesses only, post-January 2021)
Margin Scheme Second-hand goods sold under the VAT Margin Scheme
Unreconciled Items not yet matched to a bank transaction — excluded from all submissions
Disallowable Expenses not allowable for tax — excluded from ITSA but visible in records
Personal Personal income or expenditure — excluded from VAT and ITSA
Ignore Fully excluded from all calculations and submissions

Categories

Categories depend on your income source type.

Self Employment (sole traders and general businesses)

Income: Turnover, Any other business income, Other income out of scope for VAT, HMRC refund

Expenses: Cost of goods bought for resale or goods used, Construction industry - payments to subcontractors, Wages, salaries and other staff costs (out of scope for VAT), Car, van and travel expenses, Rent, rates, power and insurance costs, Repairs and maintenance of property and equipment, Phone, fax, stationery and other office costs, Business entertainment costs, Advertising costs, Interest on bank and other loans, Bank, credit card and other financial charges, Irrecoverable debts written off, Accountancy, legal and other professional fees, Depreciation and loss or profit on sale of assets, Other business expenses, Other expenses out of scope for VAT, HMRC payment

General (excluded from tax calculations): Bank Transfer, Balancing Transaction, Other

UK Property (UK landlords)

Income: Rents received, Other income from property, Rents received from rent-a-room properties, Tax deducted from the rental income, Premiums for the grant of a lease, Reverse premiums and inducements, HMRC refund

Expenses: Rent, rates, insurance and ground rents, Property repairs and maintenance, Non-residential property finance costs, Legal, management and other professional fees, Costs of services provided, including wages, Other allowable property expenses, Car, van and travel costs, Rent a Room exempt, Residential property finance costs, Unused residential property finance costs brought forward, HMRC payment

General (excluded from tax calculations): Bank Transfer, Balancing Transaction, Other

Foreign Property (overseas landlords)

Income: Rent and other income, Other property income, Premiums paid for the grant of a lease, Foreign tax taken off or paid, UK tax taken off, HMRC refund

Expenses: Premises running costs, Repairs and maintenance, Financial costs, Professional fees, Cost of services, Travel costs, Residential financial cost, Brought forward residential financial cost, HMRC payment

General (excluded from tax calculations): Bank Transfer, Balancing Transaction, Other