UK Bookkeeping

Liabilities (2000–2999)

| Code | Account | Type | |---|---|---| | 2100 | Trade Creditors (Accounts Payable) | Current liability | | 2101 | Other Creditors | Current liability | | 2102 | Accruals | Current liability | | 2200 | VAT Control Account | Current liability | | 2201 | VAT Input (Purchases) | Current liability | | 2202 | VAT Output (Sales) | Current liability | | 2210 | PAYE / NIC Liability | Current liability | | 2220 | Corporation Tax Liability | Current liability | | 2300 | Bank Loan (< 1 year portion) | Current liability | | 2310 | HP / Finance Lease (< 1 year) | Current liability | | 2400 | Bank Loan (> 1 year) | Non-current liability | | 2410 | Director's Loan Account | Non-current liability | | 2500 | Hire Purchase (> 1 year) | Non-current liability |

Equity (3000–3999)

| Code | Account | Type | |---|---|---| | 3000 | Share Capital (Ordinary) | Equity | | 3001 | Share Premium | Equity | | 3100 | Retained Earnings | Equity | | 3200 | Dividends Paid | Equity | | 3300 | Owner's Capital Introduced (sole trader) | Equity | | 3301 | Owner's Drawings (sole trader) | Equity |

Revenue (4000–4999)

| Code | Account | Type | |---|---|---| | 4000 | Sales — Standard Rate (20% VAT) | Revenue | | 4001 | Sales — Reduced Rate (5% VAT) | Revenue | | 4002 | Sales — Zero Rate (0% VAT) | Revenue | | 4003 | Sales — Exempt | Revenue | | 4004 | Sales — Exports (outside UK) | Revenue | | 4100 | Other Operating Income | Revenue | | 4200 | Discount Allowed | Contra revenue |

Cost of Goods Sold (5000–5999)

| Code | Account | Type | |---|---|---| | 5000 | Purchases — Goods for Resale | COGS | | 5001 | Purchases — Materials | COGS | | 5100 | Carriage Inward | COGS | | 5200 | Direct Labour / Subcontractor Costs | COGS | | 5300 | Stock Adjustments | COGS |

Operating Expenses (6000–6999)

| Code | Account | Type | |---|---|---| | 6000 | Rent | Overhead | | 6001 | Rates | Overhead | | 6010 | Light, Heat and Power | Overhead | | 6020 | Insurance | Overhead | | 6030 | Repairs and Maintenance | Overhead | | 6040 | Cleaning | Overhead | | 6100 | Wages and Salaries | Overhead | | 6110 | Employer's NIC | Overhead | | 6120 | Employer's Pension Contributions | Overhead | | 6200 | Advertising and Marketing | Overhead | | 6210 | Printing, Postage and Stationery | Overhead | | 6220 | Telephone and Internet | Overhead | | 6230 | Computer Software / SaaS | Overhead | | 6240 | Professional Subscriptions | Overhead | | 6300 | Travel and Subsistence | Overhead | | 6310 | Motor Expenses — Fuel | Overhead | | 6311 | Motor Expenses — Insurance | Overhead | | 6312 | Motor Expenses — Repairs | Overhead | | 6400 | Accountancy Fees | Overhead | | 6410 | Legal Fees | Overhead | | 6420 | Bank Charges and Interest | Overhead | | 6430 | Bad Debts Written Off | Overhead | | 6500 | Entertaining (non-deductible for tax) | Overhead | | 6510 | Staff Welfare | Overhead | | 6600 | Sundry Expenses | Overhead |

Other Income / Expenses (7000–7999)

| Code | Account | Type | |---|---|---| | 7000 | Interest Received | Other income | | 7010 | Rental Income | Other income | | 7100 | Profit/Loss on Disposal of Assets | Other income/expense | | 7200 | Grants Received | Other income |

Depreciation and Tax (8000–8999)

| Code | Account | Type | |---|---|---| | 8000 | Depreciation — Property | Expense | | 8010 | Depreciation — Plant and Machinery | Expense | | 8020 | Depreciation — Fixtures and Fittings | Expense | | 8030 | Depreciation — Motor Vehicles | Expense | | 8040 | Depreciation — Computer Equipment | Expense | | 8100 | Corporation Tax Charge | Tax expense | | 8200 | Dividends Receivable | Other income |

Cash Basis vs Accruals Basis

| Criterion | Cash Basis (Sole Traders) | Accruals Basis | |---|---|---| | Eligibility | Default for sole traders & partnerships from 2024-25 (no income cap since reform); election out by formal election | All entities; mandatory for companies | | Income recognised | When cash received | When earned (invoice date) | | Expenses recognised | When cash paid | When incurred | | Debtors / Creditors | Not used | Required | | Stock adjustments | Not required | Required (opening/closing stock) | | Capital items | Treated as expense when paid (except cars) | Capitalised and depreciated | | Interest restriction | £500 for cash basis | No restriction for accruals |

Revenue recognition under FRS 102/105

Under FRS 102/105, revenue is recognised when: Goods: risks and rewards of ownership transferred; Services: percentage of completion or when service delivered; Long-term contracts: stage of completion methodFRS 102/105

HMRC Self-Assessment Categories (SA103)

| SA103 Box | Category | Nominal Codes | |---|---|---| | Box 17 | Cost of goods sold | 5000–5300 | | Box 18 | Construction industry subcontractor costs | 5200 | | Box 19 | Wages, salaries and other staff costs | 6100–6120 | | Box 20 | Car, van and travel expenses | 6300–6312 | | Box 21 | Rent, rates, power and insurance | 6000–6020 | | Box 22 | Repairs and maintenance | 6030 | | Box 23 | Phone, fax, stationery, other office costs | 6210–6230 | | Box 24 | Advertising and business entertainment | 6200, 6500 | | Box 25 | Interest on bank/business loans | 6420 | | Box 26 | Bank charges, credit card charges | 6420 | | Box 27 | Irrecoverable debts written off | 6430 | | Box 28 | Accountancy, legal, professional fees | 6400–6410 | | Box 29 | Depreciation and loss on sale of assets | 8000–8040 | | Box 30 | Other business expenses | 6600 | | Box 31 | Total allowable expenses | Sum |

Non-deductible expenses list

Business entertaining (clients) — disallowed for income tax/CT; Personal expenses — not wholly and exclusively for trade; Fines and penalties — public policy; Capital expenditure — must go through capital allowances; General provisions — only specific bad debts are allowable

Capital Allowances (Not Accounting Depreciation)

| Allowance | Rate | Notes | |---|---|---| | Annual Investment Allowance (AIA) | 100% up to £1,000,000 | Most plant & machinery; NOT cars | | First Year Allowance (40%) | 40% | From 1 Jan 2026 for unincorporated businesses | | Full Expensing | 100% | Companies only, new P&M (from April 2023) | | Main Pool WDA | 18% reducing balance (14% from April 2026) | Items not covered by AIA | | Special Rate Pool WDA | 6% reducing balance | Long-life assets, integral features, high-emission cars | | Cars: CO₂ ≤ 0 g/km | 100% FYA | Electric/zero-emission | | Cars: CO₂ 1–50 g/km | 18% main pool | | | Cars: CO₂ > 50 g/km | 6% special rate | | | Small Pools Allowance | Write off pool balance ≤ £1,000 | |

Accounting Depreciation (Book Purposes)

| Asset Class | Typical Book Rate | Method | |---|---|---| | Freehold property | 2% | Straight-line | | Leasehold improvements | Over lease term | Straight-line | | Plant and machinery | 15–25% | Reducing balance or straight-line | | Fixtures and fittings | 15–20% | Straight-line | | Motor vehicles | 25% | Reducing balance | | Computer equipment | 33% | Straight-line (3-year life) |

Low-value item policy

No statutory de minimis in UK GAAP, but common practice: items under £100–£500 expensed directly. Firms should set and document their own capitalisation policy.

Common UK Bank Formats

| Bank | Export Format | Key Fields | |---|---|---| | Barclays | CSV, OFX | Date, Description, Amount, Balance | | HSBC | CSV, PDF | Date, Payment Type, Description, Paid Out, Paid In, Balance | | Lloyds | CSV, OFX | Transaction Date, Description, Debit, Credit, Balance | | NatWest / RBS | CSV, OFX | Date, Type, Description, Value, Balance | | Starling | CSV, QIF | Date, Counter Party, Reference, Type, Amount, Balance | | Monzo Business | CSV | Date, Name, Amount, Category, Notes | | Tide | CSV | Date, Description, Money In, Money Out, Balance |

Common Transaction Descriptions

| Pattern | Likely Classification | |---|---| | FPO / FPI (Faster Payment Out/In) | Transfer — check counterparty | | DD (Direct Debit) | Regular expense (insurance, utility, subscription) | | STO (Standing Order) | Regular expense (rent, loan repayment) | | BGC (Bank Giro Credit) | Income — customer payment | | CHQ (Cheque) | Varies — check payee | | DEB / VIS / MC (Card Payment) | Expense — check merchant | | HMRC VAT, HMRC PAYE, HMRC CT | Tax payment — exclude from P&L expenses | | STRIPE, PAYPAL, GOCARDLESS | Payment processor — match to invoices | | TFR (Transfer) | Internal — possible own-account transfer |

FRS 105 Simplifications (Micro-Entities)

| Feature | Simplification | |---|---| | Financial statements | Balance sheet + P&L only (no cash flow, no directors' report) | | Disclosures | Minimal — only advances/credits to directors, guarantees | | Revaluation | Prohibited — historical cost only | | Deferred tax | Not recognised | | Financial instruments | All at cost or amortised cost | | Leases | All treated as operating leases | | Government grants | Recognised when receivable | | Filing | Abbreviated accounts at Companies House (P&L not public) |

Qualifying Thresholds (from 6 April 2025)

| Regime | Turnover | Balance Sheet | Employees | |---|---|---|---| | Micro-entity (FRS 105) | ≤ £1,000,000 | ≤ £500,000 | ≤ 10 | | Small company (FRS 102 s.1A) | ≤ £15,000,000 | ≤ £7,500,000 | ≤ 50 |

Cash basis default and features

From 2024-25 onwards, cash basis is the default for sole traders and partnerships, with no income cap following the reform. Taxpayers may elect out via a formal election to use the accruals basis. Under cash basis: No debtors/creditors accounting; No depreciation (capital items expensed — except cars); Interest expense capped at £500; Loss relief restricted to current trade only

MTD ITSA mandate details

Sole traders and landlords with gross income > £50,000 in 2024-25 are mandated into MTD ITSA from 6 April 2026. This is the largest bookkeeping change in the 3-year window: Quarterly updates (digital records of income and expenses) submitted via MTD-compatible software; End-of-period statement and final declaration replace the traditional SA return for in-scope taxpayers; Digital record-keeping requirement — paper ledgers no longer sufficient for in-scope businesses; Phase 2 (>£30,000) follows from 6 April 2027. Bookkeeping software choice and chart-of-accounts mapping should be MTD-ITSA-ready for any client expected to cross the £50,000 threshold for 2024-25.6 April 2026

Bookkeeping to income tax mapping

Bookkeeping P&L feeds directly into SA103 (self-employment) or SA105 (property); Add back: entertaining, depreciation, personal element of mixed expenses; Deduct: capital allowances (in place of depreciation), trading losses brought forward; Cash basis taxpayers report income/expenses as per bank, with no accruals adjustments

Bookkeeping to CT600 mapping

Start with accounting profit per FRS 105/102; Adjust: add back book depreciation, non-deductible entertainment, general provisions; Deduct: capital allowances, R&D enhanced deduction if eligible; GAAR / transfer pricing for connected parties

VAT Return (Making Tax Digital)

| BAS Box | Description | CoA Mapping | |---|---|---| | Box 1 | VAT due on sales | 2202 (output VAT) | | Box 2 | VAT due on acquisitions from EU | 2202 | | Box 3 | Total VAT due (Box 1 + 2) | Calculated | | Box 4 | VAT reclaimed on purchases | 2201 (input VAT) | | Box 5 | Net VAT to pay or reclaim | 2200 (control) | | Box 6 | Total sales excl. VAT | 4000–4004 | | Box 7 | Total purchases excl. VAT | 5000–5300 + 6000–6600 | | Box 8 | Supplies of goods to EU | 4004 (subset) | | Box 9 | Acquisitions from EU | 5000 (subset) |

Payroll RTI reporting rules

Report PAYE/NIC to HMRC on or before each pay date via Full Payment Submission (FPS); Employer Payment Summary (EPS) for recoverable amounts; Nominal 6100 (gross wages) + 6110 (employer NIC) + 6120 (employer pension) = total staff cost