How SimpleTaxFlow works: from your figures to HMRC

Making Tax Digital for Income Tax starts with HMRC, not with software. You sign up through HMRC, or HMRC signs you up if you need MTD and have not done so. To sign up yourself you must be registered for Self Assessment and have sent a tax return in the last 2 years.

In SimpleTaxFlow, choose Connect HMRC and sign in with your HMRC details. SimpleTaxFlow then reads the businesses HMRC holds for you and the quarterly updates HMRC expects from each one. Only you connect your own HMRC account.

You can add income and expenses in Bookkeeping before you connect. Connecting is what shows your deadlines and lets you send.

Open Tax. Each business is listed with its quarters and the dates HMRC holds for them. SimpleTaxFlow never works out a deadline itself. Choose Check update on the quarter you want to send.

For your first update of the tax year you will also see View or change update periods. That is where calendar update periods are chosen, if your accounts run from 1 April to 31 March. HMRC does not let you change your periods after the first update of the year is sent.

Each business answers one question for each tax year: “Do you expect this business’s turnover to be £90,000 or more this tax year?” It follows HMRC’s simpler categorisation rule, which is tested for each income source on its own.

Choose No, use Simple if turnover will be under £90,000. You only mark each record as income or an expense, and one expenses total is sent. Choose Yes, use Detailed if it will be £90,000 or more, and expenses are sent in HMRC’s categories. If you are not sure, HMRC says to use the full categories from the start.

If your recorded turnover reaches £90,000, Detailed applies for that tax year and the next, and the update tells you so. For UK property, residential finance costs always stay on their own line.

If you keep a spreadsheet, the first card of the update is where your figures go in. Your file holds totals for the tax year so far, not just the latest quarter.

Spreadsheet upload works for self-employment and UK property. For jointly owned property, upload your own share. A self-employment CSV in GoFile’s layout also works. If you need to correct something, fix the file and upload it again. It replaces your last upload for that business and tax year.

1. 1Choose Download the template if you do not have a spreadsheet set up yet.
2. 2Fill in your totals from the start date shown on the update to the end of the period, then save the file as CSV. The start is 6 April for HMRC’s standard periods, or 1 April if you chose calendar update periods.
3. 3Set Figures up to the last date your spreadsheet covers.
4. 4Choose Upload spreadsheet and select your CSV file.

If you do not keep a spreadsheet, choose Add income and expenses instead, or open Bookkeeping. Choose Income / Expense, then Single Income / Expense for one record or Multiple Income / Expense for several at once. Each record needs the date, the amount and whether it is income or an expense. Under Detailed you also choose a category.

You can combine both. If your spreadsheet stops partway through a period, set Figures up to its last date and record the rest in Bookkeeping, from the following day. For jointly owned UK property, upload your own share. In Bookkeeping, choose Whole property if you entered the full amount, or My share if the amount is already yours.

The Check your figures card shows exactly what HMRC will receive: income, expenses and profit for the tax year so far. Lines that changed since your last upload are highlighted. Checks lists anything that must be fixed first, such as records that still need a category.

You then tick two declarations: that the figures represent your business income and expenses for the period, and that you have captured all transactions to the best of your knowledge. The button reads Submit, followed by the quarter, for example Submit Q1 update.

SimpleTaxFlow saves the exact figures you sent and the date and time. What HMRC has on file shows, separately, what HMRC currently holds. If you find a mistake later, correct your records and send the update again, or let the correction flow into your next update.

Once an update is accepted, choose See HMRC’s calculation. It shows HMRC’s figure for the tax year so far, as HMRC returned it. It is a point-in-time calculation, not a bill.

Any estimate of our own is shown separately and labelled as an estimate. Sending an update does not take a payment. You pay HMRC on the usual Self Assessment dates.

After the fourth update, choose Open year-end steps in Tax. You can add allowances and adjustments and claim losses.

When everything is ready, choose Submit tax return and confirm the declaration. The tax return is due by 31 January after the tax year ends. You can amend it within 12 months of that deadline.

You can also add other income here, such as employment, savings, dividends and CIS deductions.

Use this table as a map the first time you send. The labels are the ones you will see on screen.

Below it is how the figures look for a fictional first update. The same steps repeat each quarter, with figures for the tax year so far.