Using Simplified 3‑line Accounting for Self‑Employed MTD ITSA Quarterly Returns

1. What is 3‑line accounting?

3‑line accounting is a simplified quarterly reporting style where you submit:

• Total income
• Total expenses
• Net profit (income minus expenses)

It is designed for smaller, simpler businesses where HMRC allows a more summarised presentation. You must always check HMRC rules to confirm eligibility.

2. Eligibility

• HMRC sets eligibility criteria (for example turnover limits and business type).
• BrightBooks provides a simplified view; it does not decide whether your client is eligible.
• Always confirm eligibility using HMRC guidance or professional advice.

3. Enabling 3‑line accounting in BrightBooks

If supported in your version:

1. Go to Settings → MTD for ITSA → MTD Tax Setup.
2. Select the self‑employment income source.
3. Choose the simplified reporting/3‑line option if available.
4. Save your changes before generating the quarter.

(If you do not see a 3‑line option, use the standard category view or check with support.)

4. Recording income and expenses

Even when you use a 3‑line summary for quarterly submissions:

• You must still maintain adequate digital records that support the totals.
• You can:
  • Record detailed transactions in BrightBooks, which the system then summarises, or
  • Maintain detail in external spreadsheets and enter quarter totals directly.

5. Preparing the quarterly return

In 3‑line mode, the quarterly screen will show:

• A box for total self‑employment income
• A box for total self‑employment expenses
• A profit figure (either auto‑calculated or entered manually, depending on implementation)

Check how your BrightBooks instance behaves and follow on‑screen guidance.

6. Submitting to HMRC

Once you’ve reviewed and saved the 3‑line figures:

1. Tick the declaration and click Submit.
2. BrightBooks sends the simplified totals to HMRC via the MTD API.
3. At year end, your tax software may require more detailed information for the final declaration.