Follow these steps to configure your data for MTD for Income Tax.
Note: If you are creating a new Sole Trader set of data, these options are enabled by default. For existing Sole Traders, follow the steps below.
Step 1: Update Setup options
Go to Setup > Business Details and enter your National Insurance Number (NINO).
Then go to Setup > Income Tax > MTD IT Settings.
Say 'Yes' to the first option and ensure your NINO is populated.
It will then present you with 3 MTD IT options that can be enabled; tick the submission types applicable to you:
Business Income (Trading)
UK Property
Foreign Property
Define Your Basis & Dates: For each enabled type, select the settings that match your HMRC registration:
Starting Tax Year
Quarterly Type: Select 'Calendar' (1 April – 30 June etc) or 'Standard' (6 April – 5 July etc).
Calculation Basis: Choose 'Accruals' or 'Cash'.
Save Changes
You will be presented within an option to grant authority with HMRC - authority will need to be granted prior to submitting your first quarterly return.
Step 2: Configure Your Heading codes
Mapping your Heading Codes ensures your data flows into the correct boxes on your returns.
Note: You only need to configure Profit and Loss (Sales, Purchases and Overhead Expenses) Heading Codes.
Setup > Heading Codes > Heading Code setup.
Double click on the purple arrow of Sales/Purchases/Overhead Expenses, then a single click on the green arrow of a Heading Code group below.
This will display your Heading Codes on the right hand side of the screen.You will see two new columns - 'MTD' & 'Disallowable'.
Under MTD, select the relevant Income Tax return category where each is proceeded by the return type to be affected e.g. SOLE for your trading return, UKP for UK Property etc.
Disallowable (Trading Only): Ticking this check box for Trading 'Purchase' or 'Overhead Expense' Heading Codes will give you the option, within data entry screens, to choose whether that specific entry should be classified as a disallowable expense.
Need help with mapping? You can provide your backup to an accountant or publish the MTDTax Chart of Accounts Detailed report from the Audit Trails tab of the Report Library.
Foreign Property Setup (If Applicable)
If you submit Foreign Property returns, HMRC requires these to be tracked individually. We use the Searchcodes to manage this.
Create Property Profiles: Go to Setup > Searchcodes > Setup Searchcodes.
Click 'New' at the bottom and populate with details, including ticking 'Is this a property?'.
This will give you additional options to select - the country code, whether you're claiming foreign tax credit relief, and options to choose if you're no longer receiving income from the property.
Data Entry: When recording transactions, ensure you allocate them to the correct Searchcode so they are included in the right return.
Step 4: Quarterly Submissions
Once your setup is complete and your data is entered, Business Manager enables you to submit your four quarterly returns directly to HMRC.
Please note: You will still need your accountant or a secondary software for your "End of Period Statement" (EOPS) and Final Declaration.