If you do not already use a bookkeeping spreadsheet, you can download and use the Coconut MTD Bridging Bookkeeping Template provided below.
This template is pre-configured to build a compliant digital link directly to your Coconut Web account.
Step 1: Read the Summary Tab
Before entering any data, open the spreadsheet and read through the Summary tab. This provides an important foundational overview of how the workbook aggregates your data.
Step 2: How to Enter Transactions (The "Bookkeeping" Tab)
Log all of your day-to-day business transactions sequentially on the Bookkeeping tab. Use a separate row for each individual transaction and fill across the four core columns:
Column | Name | What to Enter |
Column A | Date | The date the transaction occurred (DD/MM/YYYY). |
Column B | Drop-down category | Click the cell and use the drop-down menu to pick the most appropriate tax category (e.g., Sales, Car/van fuel, Rent and rates). |
Column C | Amount (£) | Enter the exact amount. Always use positive numbers for both income and expenses. Only use a negative number if you are entering a refund. |
Column D | Description | Enter a clear description, customer name, or invoice/receipt reference number to easily identify the transaction later. |
Step 3: Critical HMRC Exclusions
To ensure your quarterly tax calculation is accurate, certain transactions must be excluded from your quarterly MTD figures. Refer to this checklist before finalising your entries:
Drawings (Personal Withdrawals): Moving money to your personal account or paying for personal expenses is not a business expense and does not reduce your taxable profit.
Capital Repayments on Loans/Hire Purchase (HP): Paying off the principal balance of a loan reduces a liability on your balance sheet; it is not a day-to-day business cost.
What to do instead: Only record the interest or finance charge element of the payment, as this part is tax-deductible.
Bank Interest Received: For sole traders, savings interest is non-trading investment income. It will be reported separately on your end-of-year Final Declaration—do not include it in your quarterly business turnover.
Purchase of Capital Assets (Vans, Laptops, Machinery): These are capital expenditures. While you track them for your records, exclude them from your quarterly MTD expense updates. Tax relief for these is claimed via Capital Allowances at the end of the tax year.
HMRC Tax and National Insurance Payments: Paying your personal tax bill or self-employed NI contributions is a personal liability, not a cost incurred to run your business.
Step 4: Finalise and Prepare for Upload
When a reporting quarter closes and you are ready to file via Coconut Web:
Go to the Upload tab within the spreadsheet.
Select the relevant Quarter end date from the drop-down list. This updates the data payload for submission.
Select File > Save As to save a copy of this specific quarter's file.
💡 Tip: We highly recommend including the reporting date in the filename (e.g.,
MTD_Bookkeeping_Q1_July2026.xlsx).Keep this saved file safe as your permanent audit record of what was submitted to HMRC.
Complete the MTD submission for the quarter as follows
Go to the MTD ITSA tab on Coconut web
Click the Quarter to be submitted for the business
If the business's MTD reporting obligations are not displayed please refer to Connect Coconut to HMRC
Upload the file saved at 3. above
Review the amounts
Click Submit Information to HMRC
Confirm the totals, tick the boxClick Submit Information to HMRC
Always return to your main "Master" spreadsheet document to continue your day-to-day bookkeeping for the next quarter.