Making Tax Digital glossary

Digital Records

Your income and expense records in FileThat, one for each receipt or transaction. They are what fill your quarterly updates: FileThat adds them up for each period, and the date of each record decides which period it counts in. Keeping digital records is free.

Income & Expenditure Ledger

A free record book for people whose accountant files for them. You log income and expenses, attach receipts, and export a CSV and PDF for your accountant for £2.99. Nothing in the ledger is sent to HMRC.

💡 Filing through FileThat yourself? Keep your records in Digital Records instead. Only Digital Records feed your quarterly updates.

Bulk Upload

Adding many digital records at once from a spreadsheet, as CSV or Excel, using the template on the Digital Records page. Any rows that are skipped are listed with the reason. Fix the ones that could not be read and upload them again, but leave the ones skipped because they are already recorded. For foreign property, a row must name a property you have registered with HMRC.

Signing Up for MTD for Income Tax

A step you take with HMRC on GOV.UK before you can file through any software. Connecting FileThat to HMRC with your Government Gateway login does not sign you up. If you are not signed up, HMRC will not give FileThat your business details.

HMRC Business ID

The reference HMRC gives each of your businesses, such as your self-employment or your UK property business. FileThat needs it to send your quarterly updates to the right place. On the organisation form, the fetch button looks it up from HMRC using your National Insurance number, and saving the form keeps it.

Business Use Percentage

For a cost that is partly personal, such as a phone or broadband bill, the share used for your business. FileThat claims only that share as a business expense. If you are VAT registered and the VAT share is different, you can give a separate VAT business use percentage; otherwise the same percentage is used for both.

💡 Keep a note of how you worked the percentage out. You must be able to justify it if HMRC asks.

VAT Return Boxes

FileThat works out the boxes on your VAT return from your VAT digital records, or from your own spreadsheet if you upload one. You do not type figures into the boxes. Anything that belongs on the return but has no transaction behind it goes in the VAT adjustment journal.

VAT Adjustment Journal

Where you record a VAT adjustment that has no transaction behind it, with the reason. Each entry changes a box by a stated amount and stays on record, so you can always see why a box differs from your records.

Credits

How you pay for filing. One credit is used each time you submit a new quarterly update or VAT return for a business. A NIL VAT return is always free, and once you have paid £50 in a tax year, the rest of that year's filings are free. The annual submission, the Final Declaration, supporting information and amendments are all free. New accounts start with 4 free credits.

Early Adopter Price

The first 500 people to connect FileThat to HMRC keep a locked-in price of £3.99 per credit.

Agent and Client

An agent is an accountant or tax adviser with an HMRC agent services account who files for other people, their clients. A client authorises their agent through HMRC. In FileThat, an agent works on each client's records and filings from the agent pages.

HMRC Recognised

FileThat is on HMRC's list of software on GOV.UK that works with Making Tax Digital. HMRC does not recommend one product over another.

Bridging Software

Software that takes figures from records you keep somewhere else, usually a spreadsheet, and sends them to HMRC. HMRC describes it as software that connects to existing records kept in spreadsheets or other accounting tools. FileThat does this for VAT returns and quarterly updates: you upload your figures through its CSV or Excel template.

Digital Link

HMRC's rule that figures must move between your records and the software that files them digitally, without anyone retyping them. Linked spreadsheet cells, exporting and importing a file, and uploading a template all keep the link. Copying numbers across by hand breaks it.

Business Expenses

The costs you paid out to run your business during the period. Claiming them reduces your profit, which reduces your tax bill. You can enter a single Consolidated Expenses figure (ideal if your accountant gives you one number) or a full breakdown by category such as materials, subcontractors, travel, premises, advertising, and professional fees.

💡 Use Consolidated Expenses if your annual turnover is £90,000 or below. It is much simpler and HMRC accepts it.

Disallowable Expenses

The portion of a cost that HMRC does not allow as a tax deduction, even though you genuinely paid it. Common examples: speeding fines (fines are never allowable); client entertainment (HMRC does not allow this); the full purchase price of a new van (a capital cost; claim via Annual Investment Allowance instead); accounting depreciation (HMRC uses its own capital allowances rules); and the personal portion of a shared phone or fuel bill.

💡 Only fill in Disallowable Expenses if you are using the detailed expense breakdown. If you use the Consolidated Expenses field, this step is skipped.

Annual Investment Allowance (AIA)

Lets you deduct the full cost of most new tools, equipment, or machinery in the year you buy them, up to the annual limit (currently £1 million). For example, if you buy a new van for £20,000, you can offset the entire £20,000 against your profit in the year of purchase rather than spreading it over several years.

💡 If you bought tools, a van, or other equipment for your business this year, enter the cost under AIA. You can usually claim the full purchase price in one go.

Capital Allowance: Main Pool

For assets like a work van, you write off a percentage of the remaining value each year (currently 18%) rather than the whole cost at once. The "pool" accumulates the value of qualifying assets and the allowance is calculated on the pool balance.

Capital Allowance: Special Rate Pool

For long-life assets (e.g. built-in heating systems in a property) which use a smaller annual write-down rate (currently 6%). These assets have a useful life of more than 25 years.

Zero Emissions Car Allowance

If you bought a fully electric van or car purely for business use, you can claim 100% of the cost in the first year, effectively the same as AIA but specifically for zero-emission vehicles.

Trading Allowance

A simple flat-rate alternative to claiming actual expenses: you deduct £1,000 from your income instead of itemising costs. Cannot be claimed alongside any other allowances or expenses. Ideal for very small or occasional self-employment income.

Business Adjustments (Self-Employment)

Corrections that HMRC requires to move from your accounting profit to your taxable profit. Common examples: goods or services taken for own use (e.g. using business materials on your home; the value is added back to profit); overlap relief (a credit from the old basis-period rules, usable when closing or changing your accounting period); basis period adjustment (a correction during the 2023–2028 transition to tax-year basis); and balancing charges (if HMRC previously gave you capital allowances on an asset you have now sold or scrapped, some relief may be reclaimed).

💡 Most self-employed people leave all of these at zero. Only fill them in if your accountant has confirmed they apply to your situation.

Structured Building Allowance (SBA)

If you spent money constructing or renovating a commercial building, such as a workshop, office, or industrial unit, you can claim 3% of the qualifying spend per year as a tax relief. For example, if you spent £50,000 building a workshop, you can claim £1,500 off your profit each tax year for around 33 years.

💡 This only applies if you own or lease a commercial building and paid for its construction or major renovation. Most people without commercial premises can skip this.

Enhanced Structured Building Allowance (ESBA)

Works the same way as the standard SBA but applies to buildings in special qualifying zones or enterprise areas designated by the government. The rate is 10% per year instead of the standard 3%.

UK Property Income

Income you received from your UK rental properties during a period. This includes: total rents from tenants; lease premiums and lump sums (one-off payments by a tenant at the start of a long lease); inducement payments (money received to attract a new tenant); rent and service income (rent plus charges for extras like cleaning); and rents received across all properties. Only include money actually received, not what you are owed.

💡 Leave a field at 0 if it does not apply to any of your properties.

UK Property Adjustments

Year-end corrections for your UK property business that fine-tune income and allowance figures before the final tax calculation. Includes: private use adjustment (reduces expenses if part of the property was used personally); balancing charge (amount added back when an item you claimed capital allowances on is sold, given away, or scrapped); BPRA balancing charges (the same concept applied to Business Premises Renovation Allowance).

💡 Most people leave the numeric fields at 0 unless they sold equipment during the year or used the property personally.

UK Property Allowances

Allowances that reduce your taxable profit by letting you deduct the cost of certain assets and investments in your UK property business. Includes: Annual Investment Allowance (AIA) for equipment or furniture; other capital allowances; Business Premises Renovation Allowance (conversion of empty premises in disadvantaged areas); cost of replacing domestic items like white goods or furniture; zero emissions car allowance; and the £1,000 Property Income Allowance.

💡 You cannot claim both the Property Income Allowance and other expenses. If your costs exceed £1,000, use the detailed fields instead.

Furnished Holiday Letting (FHL)

A special tax regime for furnished holiday lets, abolished from 6 April 2025. Former holiday lets are now taxed as part of your ordinary UK or foreign property business under the same rules as any other let, so there are no separate FHL adjustments, allowances or loss claims any more. You may still see FHL on HMRC documents for 2024-25 and earlier.

💡 If you used to claim capital allowances as an FHL, ask your accountant how the change affects you.

Property Income Allowance

A £1,000 tax-free allowance for individuals with small amounts of property income. If you choose this option you cannot claim any other property expenses. It is only beneficial if your actual costs are below £1,000.

Property Nickname

A short name you give each UK property, such as "12 Station Road", so you can keep its records apart from your other properties. It is only for you: HMRC receives one combined figure for all your UK properties, so the nickname is never sent to HMRC.

Non-Resident Landlord

If you live abroad but own UK rental property, HMRC operates the Non-Resident Landlord (NRL) scheme. Your letting agent or tenant may be required to deduct basic-rate tax from rent before passing it to you. Toggling this flag ensures your return reflects the correct tax-collection method.

Structured Building Allowance: UK Property

The same SBA rules that apply to self-employment also apply to commercial properties held as part of a UK property business. You can claim 3% per year of qualifying construction or renovation costs on commercial premises.

Foreign Property Income

Rental income from property located outside the UK. This must be declared on your UK Self Assessment return regardless of whether tax has been paid in the country where the property is located. Foreign Tax Credit Relief (FTCR) prevents double taxation.

Registered Foreign Property

From 2026-27, each foreign property is registered with HMRC under a name you choose, such as "Florida Beach House", and the country it is in is part of that registration. When you add a foreign property record, you pick the registered property it belongs to, and FileThat sends HMRC's reference for it. Unlike a UK property nickname, this name is held by HMRC, so a bulk upload row must use exactly the name HMRC has.

Brought Forward Losses

A trading or property loss from an earlier tax year that has not yet been used. Rather than losing the relief, you carry it forward and use it to reduce taxable profits in later years.

💡 From 2026-27, brought-forward losses are recorded in the same Losses & Claims record as your claims.

Losses & Claims

From 2026-27, HMRC keeps one Losses & Claims record for each business and tax year. It says how you want a loss used: carry back (set it against earlier income, including the special rules for losses in the first years of a business and when a business closes), carry sideways (set it against your other income in the same year), or carry forward (keep it to reduce future profits). If you use more than one, a preference order tells HMRC which to apply first.

💡 Loss rules are easy to get wrong. If you are not sure which claim suits you, ask your accountant.

Investment Reliefs: VCT

Venture Capital Trust (VCT) investments attract 30% income tax relief on up to £200,000 invested per year. A compliance certificate is required before claiming.

Investment Reliefs: EIS

Enterprise Investment Scheme (EIS): 30% income tax relief on up to £1,000,000 invested (or £2,000,000 for knowledge-intensive companies). A compliance certificate (EIS3) must be held.

Investment Reliefs: SEIS

Seed Enterprise Investment Scheme (SEIS): 50% income tax relief on up to £200,000 invested in very early-stage companies. A compliance certificate (SEIS3) must be held.

Investment Reliefs: CITR

Community Investment Tax Relief (CITR): 25% relief spread over 5 years on qualifying investments in accredited Community Development Finance Institutions.

Foreign Tax Credit Relief (FTCR)

If you have income from overseas and have already paid tax in that country, FTCR prevents you being taxed twice on the same income. You record the foreign taxes paid so they can be matched against your UK liability. FTCR can only reduce UK tax up to the amount attributable to that foreign income.

💡 You cannot claim more FTCR than the UK tax due on the foreign source income.

Charitable Giving / Gift Aid

Tax relief on charitable donations made during the tax year. For Gift Aid donations, HMRC adds basic-rate relief to the charity on your behalf. Higher-rate taxpayers can claim additional relief via their return. You can also declare gifts of investments (shares, securities, or property donated at market value) and donations to qualifying overseas charities.

💡 If you pay higher-rate tax, claiming Gift Aid here entitles you to further relief on top of what the charity reclaims directly.

Other Reliefs

Miscellaneous tax reliefs including: non-deductible loan interest (pre-1999 loans for life annuities); payroll giving (charitable donations from salary before tax); maintenance payments (court-ordered payments to a former spouse born before 6 April 1935); post-cessation trade relief; and qualifying loan interest (interest on loans used to invest in a close company or employee-owned business).

Savings Accounts & Personal Savings Allowance (PSA)

UK banks and building societies may deduct tax from savings interest at source. This section records interest that was either taxed or untaxed during the year so your Personal Savings Allowance (PSA) is applied correctly. Basic-rate taxpayers can earn £1,000 in savings interest tax-free per year; higher-rate taxpayers £500. Amounts above those thresholds are taxable.

💡 Enter each savings account separately, noting whether interest was taxed at source or paid gross.

CIS Deductions (Construction Industry Scheme)

If you work as a subcontractor in the construction industry, your contractor must deduct tax at source under CIS: either 20% (if you are registered) or 30% (if unregistered). These deductions act like tax already paid and reduce your final Self Assessment liability. For each contractor you record their name, employer reference number (ERN), the period covered, gross amount paid, cost of materials, and amount deducted.

💡 If your CIS deductions exceed your tax liability for the year, you may be entitled to a refund after your return is submitted.

Marriage Allowance

Lets the lower-earning partner transfer up to £1,260 of their personal allowance to their spouse or civil partner, reducing the recipient’s tax bill by up to £252 per year. Both partners must be basic-rate taxpayers. You provide the recipient’s NINO, name, and date of birth.

💡 You can backdate a Marriage Allowance claim for up to four previous tax years, potentially generating a refund for each year.

High Income Child Benefit Charge (HICBC)

If you or your partner received Child Benefit and either of you had adjusted net income above £60,000 (£50,000 before April 2024), a tax charge claws back some or all of the benefit. You declare the total Child Benefit received, the number of children, and if applicable the date payments stopped.

💡 If your income is between £60,000 and £80,000 only part of the benefit is charged back. Above £80,000 the full amount is reclaimed via the charge.

Seafarers Earnings Deduction (SED)

Allows UK resident seafarers to claim 100% tax relief on earnings from employment duties performed outside the UK. To qualify you must work on ships outside UK territorial waters for at least 365 days in a qualifying period.

💡 You can add multiple entries for different employers or voyages within the same tax year.

Pension Charges

Charges that arise when pension contributions or transfers exceed HMRC allowances, or when a pension scheme makes payments that do not meet the rules. Types include: savings tax charges (on pensions exceeding annual or lifetime allowance; pre-2024 tax years only); overseas transfers (charges on QROPS transfers); unauthorised payments (payments from a pension that break HMRC rules); contributions; and overseas contributions.

💡 Savings Tax Charges only apply to tax years before 2024-25 when the lifetime allowance was removed.

Disclosures: Tax Avoidance

A legal requirement to notify HMRC if you have used a notified tax avoidance scheme. You provide the Scheme Reference Number (SRN) and a brief description. This is separate from any appeal of the scheme itself.

Disclosures: Class 2 NICs

A voluntary payment of Class 2 National Insurance available to self-employed individuals whose profits fall below the Small Profits Threshold. Paying voluntarily protects your State Pension entitlement and entitlement to certain contributory benefits.

Capital Gains: Other

Disposals of assets other than UK residential property, such as shares, listed or unlisted securities, and other assets. You report disposals, non-standard gains, losses, and adjustments. UK residential property has its own pages: PPD, for disposals you have already reported and paid through HMRC's "Report and pay Capital Gains Tax on UK property" service, and non-PPD for the rest.

Coding Out

How HMRC collects certain debts and tax underpayments through your PAYE tax code, meaning the amounts are spread across your salary deductions rather than paid as a lump sum. There are four components: PAYE Underpayment, Self Assessment Underpayment, Debt, and In Year Adjustment.

💡 Coding Out entries can only be edited once the tax year has ended (after 5 April). Select a completed tax year to add or amend entries.

PAYE Underpayment

Occurs when you paid less tax through your employer than you owed in a previous year, for example because your tax code was incorrect. Rather than demanding a lump sum, HMRC adjusts your code so the shortfall is collected gradually from your salary. The amount is shown on your P2 Coding Notice.

💡 You can have multiple PAYE Underpayment entries, for example if you had more than one employer in the underpaid year.

Self Assessment (SA) Underpayment

SA tax that you owe and have agreed with HMRC to pay back through your PAYE code rather than as a direct payment. Available when the amount owed is within certain limits. HMRC cannot code out SA underpayments above those thresholds. Larger balances must be paid directly.

Debt (Coding Out)

HMRC can collect certain other government debts through your PAYE tax code, including tax credit overpayments and some DWP debts. Each debt entry represents a separate amount being recovered this way.

💡 If you are unsure whether a particular debt qualifies for coding out, check your P2 Coding Notice or contact HMRC.

In Year Adjustment

A real-time change made to your tax code during the current tax year, unlike underpayments, which relate to past years. Used to correct your PAYE deductions for the year in progress, for example to account for untaxed income, a large investment gain, or an existing underpayment being collected ahead of schedule.

💡 There can only be one In Year Adjustment at a time, unlike PAYE Underpayment and Debt, which each allow multiple entries.

Tax Calculation

An estimate of how much Income Tax and National Insurance you owe for a given tax year, based on the income and expenses you have already reported to HMRC. You can request one at any time. Three types are available: In Year (a snapshot of your current position), Intent to Finalise (triggers a pre-submission check before your Final Declaration), and Intent to Amend (opens an amendment for a year you have already finalised, available until 12 months after that year's 31 January filing deadline).

💡 Request an Intent to Finalise calculation before submitting your Final Declaration to confirm everything is in order.

Final Declaration

The last step in your Making Tax Digital for Income Tax (MTD for ITSA) journey. Your legal confirmation to HMRC that all income and expenses for the tax year are complete and correct, the digital replacement for a traditional Self Assessment tax return. Steps required: complete all quarterly updates; declare all other income via Additional Information; submit an Intent to Finalise calculation; then make the Final Declaration itself.

💡 The deadline to submit is 31 January following the end of the tax year. You can amend it until 12 months after that deadline, however early you submitted.

Making Tax Digital for Income Tax (MTD for ITSA)

The government's programme requiring individuals with qualifying income above the threshold to keep digital records and submit quarterly updates to HMRC through compatible software, replacing the annual Self Assessment tax return with a rolling digital process. You must sign up for it with HMRC on GOV.UK (or your agent does it for you) before you can file through any software.

💡 Connecting FileThat to HMRC with your Government Gateway login does not sign you up. Sign up first, then connect.

Quarterly Updates

Submissions made to HMRC each quarter. Since 2025-26 each update is cumulative: it covers the tax year to date, not just the latest three months. These are not tax calculations. They are simply data sent to HMRC to keep your records current. The Final Declaration at year end is where you confirm everything.

💡 Found a mistake in an earlier quarter? Your next update corrects it, because it carries the right figures for the whole year so far.

Amendment

A correction to a Final Declaration you have already made. You can amend until 12 months after the 31 January filing deadline for that tax year, not 12 months after you submitted, so filing early never shortens your window. After that you must contact HMRC directly. Quarterly updates are not amended this way: your next update corrects them, because each one covers the year to date. Amendments are free in FileThat.