Transaction categories and disallowable expenses
When you record income or an expense you pick an HMRC category. Each category corresponds to a specific HMRC field, so the app puts your figures in the right box for you. This guide shows the current property and self-employment categories (taken live from the app, so the set stays in step and can grow) and explains the self-employment disallowable option.
On this page
How categories work
Every income or expense you record carries an HMRC category. Each category corresponds to a specific HMRC API field, so when you choose the category that best describes the money, the app maps your figure to the correct HMRC box for you. There is no separate translation step and no HMRC jargon to learn.
Your quarterly and annual figures are then built automatically from the categorised transactions you have recorded, which is why picking the right category is what keeps your HMRC totals correct.
When you add a transaction you first choose the flow, money in or money out. That filters the HMRC category picker so you only see income categories for money in and expense categories for money out.
Note: Categories are about where a figure lands with HMRC, not about receipts. A receipt is always optional. Only the property or business, the date, the amount and the category are needed to save. See Do I have to scan receipts?.
The categories
The categories below come straight from the Add a transaction form, so this guide always matches what you actually see when you record a transaction. Property categories are available on Free and MTD Lite. Self-employment is available on Free as your single income type, and on MTD Lite you can run property and self-employment together. See Recording income and expenses.
These lists come straight from the app, so they always show the categories you can pick today. The set grows as new categories are added. The flow you choose, money in or money out, decides whether you see the income or the expense categories.
Property categories
Income (money in)
- Rental Income: Total rents from property
- Lease Premiums: Premiums for granting a lease
- Reverse Premiums: Reverse premiums and inducements received
- Other Income: Other property-related income
Expenses (money out)
- Premises Running Costs: Rent, rates, insurance, ground rents
- Repairs & Maintenance: Repairs restoring property to original condition
- Financial Costs: Loan interest and other financial costs (non-residential)
- Professional Fees: Legal, management, accountant fees
- Cost of Services: Wages, contractors, cleaning
- Residential Finance Cost: Mortgage interest tax relief (Section 24)
- Travel Costs: Vehicle and travel expenses
- Other Expenses: Other allowable property expenses
- Replacement Domestic Items: Replacing furniture, appliances, kitchenware (not initial purchases)
Self-employment categories
Income (money in)
- Turnover: Total business income/sales
- Other Income: Other business income not included in turnover
- Tax Taken Off (non-CIS): Other tax taken off trading income, apart from CIS deductions. CIS deductions are not reported in quarterly updates: report gross income as turnover; CIS is reconciled at year-end.
Expenses (money out)
- Cost of Goods: Cost of goods bought for resale or raw materials
- Subcontractor Payments: Payments to subcontractors (CIS)
- Wages & Staff Costs: Employee wages, salaries, National Insurance
- Car, Van & Travel: Vehicle running costs, fuel, parking, public transport
- Premises Running Costs: Rent, rates, power, insurance for business premises
- Repairs & Maintenance: Repairs and renewals of property, equipment and machinery
- Admin Costs: Phone, stationery, printing, postage, software
- Business Entertainment: Business entertainment costs (note: generally not allowable)
- Advertising & Marketing: Advertising, marketing, and promotion costs
- Interest on Loans: Interest on bank and other business loans
- Finance Charges: Bank charges, credit card fees, hire purchase interest
- Bad Debts: Irrecoverable debts written off
- Professional Fees: Accountant, solicitor, and other professional fees
- Depreciation: Depreciation and loss on sale of assets
- Other Expenses: Other allowable business expenses
Important: Property transactions do not have a disallowable field. That option exists only for self-employment expenses (see below).
Note: For Self-employment Tax Taken Off (non-CIS), record your CIS gross income as Turnover instead; CIS deductions are reconciled at year-end. If you are unsure how CIS applies to you, check with your accountant or HMRC.
Disallowable expenses (self-employment only)
Some business costs are only partly for the business. When you record a self-employment expense you can switch on the disallowable option and enter the part of the cost that is not tax-deductible, for example the private-use portion of a vehicle.
- Open the self-employment Add a transaction form and choose an expense category.
- Switch on the disallowable option.
- Enter the disallowable amount. It cannot exceed the total amount of the expense.
- Click Save transaction.
The app stores both the total and the disallowable part, and each expense category has a matching HMRC disallowable field, so this is handled automatically when your figures are sent.
Tip: Leave the disallowable option off when the whole cost is for the business. It starts off, so a fully allowable cost needs nothing extra from you.
What specifically counts as disallowable, and how much, is tax law. For your own circumstances, check with HMRC or your accountant.
Residential Finance Cost and Section 24
The Residential Finance Cost category is where you record residential mortgage interest. It is held separately from your other expenses because it is treated differently for tax under Section 24. The app uses these figures in the Section 24 finance costs view. The tax mechanics of Section 24 are HMRC tax law, so for advice on your position check with HMRC or your accountant.
If something goes wrong
- "Invalid category selected." The category does not belong to that income type, for example a self-employment category posted on a property form. Pick a category from the in-app picker on the correct form.
- The category I want is not in the list. Check the flow first. Income categories only show for money in and expense categories only show for money out. Switch the flow to reveal the other set.
- I cannot see any self-employment categories. They only show on the self-employment Add a transaction form, so make sure you are on that form and not the property one, and that you have set up a self-employment business. Self-employment is available on Free as your single income type, and running it alongside property needs MTD Lite. See Recording income and expenses.
- "Disallowable amount cannot exceed the total." The disallowable part you entered is larger than the expense itself. Lower it so it is at or below the total, or turn the disallowable option off.
- "Missing required fields." A transaction needs the property or business, a date, a non-zero amount and a category. A description and a receipt can stay blank.
Frequently asked questions
Do I have to pick the perfect category?
Pick the category that best describes the money. Each one maps to a specific HMRC field automatically, so you do not need to know the HMRC box. If you are unsure which category is right for your situation for tax purposes, check with your accountant or HMRC.
Why do my property transactions have no disallowable option?
The disallowable field only exists for self-employment expenses. Property transactions do not have a disallowable part, so the option does not appear on the property form.
What is the Residential Finance Cost category for?
It is where you record mortgage interest, which is relevant to Section 24. See Section 24 finance costs for how the app uses it. The tax treatment itself is HMRC tax law, so check with HMRC or your accountant.
Can I change a category after I have saved a transaction?
Yes. Open the transaction, change the HMRC category and save. Your quarterly and annual figures are rebuilt automatically from your categorised transactions.
Related guides
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Get StartedContact supportThis guide explains how to use the app. It is general information to help you use the software, not tax or legal advice. For advice on your own circumstances, speak to a qualified accountant or HMRC.