Understand Income Tax Mapping

Acxite simplifies your Making Tax Digital (MTD) for Income Tax reporting by mapping your recorded income and expenses to the relevant HMRC tax boxes. By configuring your Income Tax mappings, you can ensure that your Chart of Accounts categories are assigned correctly and that the figures in your quarterly update are calculated accurately.

This guide will walk you through the Income Tax summary page, configuring MTD Income Tax and how MTD Income Tax mapping works.

Prerequisites

Before exploring Acxite, ensure you have:

• An active Acxite account.
• Successfully logged into your Acxite business.

Understanding the Income Tax Summary Page

The Income Tax Summary page provides an overview of your HMRC obligations, including the period start and end dates and submission status.

• Income Source Mapping: This button, located at the top right, is not a crucial configuration tool. It allows you to define how your business’s categories are mapped to the official HMRC income tax boxes.
• Tax Box Mapping: When you click Income Tax Mapping, a new screen opens with three tabs on top: Self Employment, UK Property, and Foreign Property. Select the relevant income type to configure its mapping.
• Create Offline Reports: This option allows you to create an offline report to track an Income Tax obligation submitted through a different software.

Understanding and Configuring MTD Income Tax Mapping

MTD Income Tax Mapping is the process of mapping your charts of accounts in Acxite to the correct boxes on your MTD quarterly update. This ensures that every transaction is reported correctly to HMRC.

While Acxite provides a default mapping, you must review and customise it to match your business’s specific accounting setup.

How MTD Income Tax Mapping Works

For each Chart of Accounts, you define how it should be treated for tax purposes.

• Income Categories: You will map each income category (e.g., Sales, Other Revenue) to the relevant HMRC income box, such as Box 15 (Your turnover) or Box 16 (Any other business income).
• Expense Categories: For each expense category, you must define two things:
  • HMRC Box Mapping: Map the expense to the appropriate HMRC expense box (e.g., Box 17 – Cost of goods bought, Box 20 – Car, van and travel expenses).
  • Tax Treatment: Specify whether the expense is Allowed, Disallowed, or has No Effect. This determines if the expense can be claimed against your income for tax purposes.
    

Steps to Configure MTD Income Tax Mapping

Step 1 – Navigate to the ‘Income Tax Summary’ page from the side menu.

Step 2 – Click the ‘Tax Box Mapping’ button located at the top right of the page.

Step 3 – A mapping page will appear. At the top, you will see three tabs: Self Employment, UK Property, and Foreign Property. Select the tab for the income type you want to map.

Step 5 – For each Income category, use the dropdown on the right to select the correct HMRC tax box (e.g., 16 – Any other business income).

Note: The Tax Treatment for Income categories is always set to Allowed and cannot be changed.

Step 6 – For each Expense category, select one of the following Tax Treatments:

• Allowed (Deductible): Business-related costs such as stock, office rent, business insurance, and professional subscriptions. These are deducted from your turnover to calculate taxable profit.
• Disallowed (Non-Deductible): Costs that cannot be claimed against business income. This includes personal expenses (e.g., non-uniform clothing), client entertainment, and fines. These amounts are “added back” to your profit for tax purposes.
• No Effect: Use this for transactions that are not related to the business. These transactions are excluded from the business records and do not affect business income or taxable profit. (e.g., personal grocery shopping, personal utility bill paid from the business account).

Step 7 – For Expense categories with Allowed or Disallowed Tax Treatment, select the relevant HMRC tax box from the dropdown.

Note: The HMRC tax box dropdown will be disabled when ‘No Effect’ is selected as the Tax Treatment.

Step 8 – Once all categories are mapped, click the Save button in the top right corner.

Step 9 – Enter a name for this tax mapping configuration and confirm. The saved mapping will automatically be set as the active mapping.

Note: Tax mapping is mandatory for MTD Income Tax submissions. All Income and Expense categories must be mapped before you can submit your return. The submission option will remain disabled until all categories have been mapped.

Frequently Asked Questions

Related Articles

• Connect Acxite to HMRC
• MTD Income Tax Submission