You’ve been tracking your income and expenses in an app on your phone. It works fine, but it’s not MTD-approved. You also have a FreeAgent account. With the first MTD quarterly deadline approaching, you’re wondering: can you just enter one total figure for income and one total for expenses into FreeAgent, rather than inputting every single transaction?
A Reddit post captured this exact question:
Does anyone know if, for the quarterly MTD submission, I can just enter one total figure for my income and one total figure for my expenses into FreeAgent, rather than having to input every individual invoice and expense? I’ve looked everywhere but can’t find a solid answer. If this is possible, it would make the MTD rollout a lot less painful!
The comments were partially right but missed the key distinction. One person said “only totals are being submitted to HMRC (just like VAT).” Another said “you need to record every transaction, although the software will only submit the totals.” A third suggested switching from the phone app to FreeAgent entirely.
The answer is: no, you can’t just enter totals — but the reason why is more nuanced than you might think, and the practical burden is much lighter than it first appears. Here’s the distinction between what you record and what you submit, and how to make the workflow manageable.
The Key Distinction: Record Everything, Submit Totals
The confusion in the Reddit thread comes from conflating two separate requirements: record-keeping and submission. They have different rules.
What you must record: every transaction
According to HMRC’s guidance on creating digital records, a digital record is “a record of your income or expense that’s created and stored using software that works with Making Tax Digital for Income Tax.”
For each transaction, you must record:
- The date the income was received or the expense was incurred
- The amount
- The category (type of income or expense — using the same categories as Self Assessment)
You must create a digital record for every business transaction — every sale, every invoice paid, every expense. You cannot enter a single monthly total. The record-keeping requirement is per-transaction.
What HMRC receives: category totals
According to HMRC’s guidance on sending quarterly updates:
“Every 3 months, your compatible software will add together your digital records for each business that you have. This creates totals for your self-employment and property income and expenses.”
And critically:
“HMRC will not receive details of individual digital records, such as a receipt or invoice.”
So HMRC sees category totals — “total travel expenses: £X, total office costs: £Y” — not individual transactions. Your software does the consolidation automatically. You don’t calculate the totals yourself.
Why you can’t just enter one total
The reason you can’t enter a single total for income and a single total for expenses is that MTD requires the digital records to exist in your MTD-compatible software — not just the submission totals. The quarterly update is generated from those records, not entered separately.
If you could just type “income: £5,000, expenses: £1,200” into FreeAgent and submit, there would be no digital audit trail from the individual transactions to the submitted totals. That trail is the whole point of MTD — HMRC wants to ensure the figures submitted are derived from digital records, not hand-typed.
This is also why you can’t keep tracking in your non-MTD phone app and just enter summary figures into FreeAgent for submission. The digital links rule requires an unbroken digital trail from recording to submission. If your records are in one app and your submission is in another, with manual re-entry in between, the digital link is broken.
The Simplification: Three-Line Accounts Under £90,000
There is one significant simplification that makes the record-keeping much lighter for most sole traders. If your annual turnover from a single income source (self-employment or property) is below £90,000, you can use simplified reporting — also known as three-line accounts.
Under simplified reporting, each digital record only needs:
- The date of the transaction
- The amount (income or expense)
- Whether it’s income or an expense — no category breakdown
Your quarterly update then becomes just two numbers:
- Total income for the quarter
- Total expenses for the quarter (one consolidated figure, not split by category)
You don’t need to tell HMRC how much you spent on travel versus office supplies versus insurance. The total is enough. This is a substantial simplification — instead of categorising every expense into one of HMRC’s expense categories, you just record “expense, £47.50, 15 March” and move on.
The £90,000 test applies to each income source separately, not your combined total. So if you have £60,000 self-employment income and £40,000 property income, both qualify for simplified reporting — even though your combined qualifying income (£100,000) is well above the MTD mandate threshold.
If your turnover is £90,000 or above, you must categorise all expenses by type — travel, office costs, financial costs, etc. — using the same categories as Self Assessment.
For the full details on simplified reporting, including what happens if your turnover exceeds £90,000 mid-year, see our MTD quarterly updates guide.
How FreeAgent (and Similar Software) Makes This Manageable
The Reddit poster’s fear — that they’d have to manually input every individual invoice and expense into FreeAgent — is understandable but misplaced. Modern accounting software is designed to automate the record-keeping so you’re not typing every transaction by hand.
Bank feeds: the heavy lifting
The most important feature is the bank feed. When you link FreeAgent to your business bank account, it automatically imports every transaction — income and expenses — as they hit your account. You don’t type them in.
As one Reddit commenter explained: “Have you linked your FreeAgent account to your bank account(s)? It will then ask you to categorise all transactions, and you can add information (receipts etc.) to them as appropriate. I do this for a business account and, although it was painful at first, now I just get a weekly reminder to check transactions and agree the category (it usually gets it right automatically).”
This is the standard workflow in FreeAgent and most cloud accounting software:
- Transactions arrive automatically via the bank feed — no manual entry
- FreeAgent suggests a category for each transaction based on the payee and amount
- You confirm or correct the category — usually a one-click per transaction
- FreeAgent stores the digital record — date, amount, category — automatically
- At quarter-end, FreeAgent generates the quarterly update by adding together all your digital records into category totals
- You review the totals and click submit — FreeAgent sends them to HMRC via API
The manual work is step 3 — confirming categories. With a bank feed and a few weeks of use, FreeAgent learns your common payees and auto-categorises most transactions correctly. The weekly time commitment is typically 10–15 minutes for a sole trader with moderate transaction volume.
What if you don’t have a business bank account?
The Reddit commenter who was “hesitating to use FreeAgent for self-employment because I’m still using a joint current account” raises a valid concern. If your business and personal transactions are mixed in one account, the bank feed imports everything — including your groceries and Netflix subscription — and you have to categorise each one as business or personal.
This is manageable but tedious. The better solution is to open a separate business account (free options include Wise, Mettle, Tide) and link that to FreeAgent instead. Then every transaction in the feed is business-related, and categorisation is much faster. For the full breakdown of why this matters under MTD, see our do I need a business bank account for MTD guide.
What about transactions not in the bank feed?
Some transactions won’t appear in your bank feed — cash payments, mileage expenses, personal card purchases for business purposes. For these, you create a digital record manually in FreeAgent: enter the date, amount, category, and a description. This is the same as recording them in your phone app, but now they’re in your MTD-compatible software where they’ll be included in the quarterly update.
HMRC’s guidance acknowledges this: “Some transactions may not appear in full in your bank feed and will need to be created separately as a digital record in your software.”
The Practical Workflow: What to Actually Do
If you’re in the Reddit poster’s situation — tracking in a non-MTD app, with a FreeAgent account, and an MTD deadline approaching — here’s the practical path:
Step 1: Move your record-keeping into FreeAgent
Stop using the separate phone app for business record-keeping. You don’t need to import your historical records from the phone app into FreeAgent (unless you want to), but from your MTD start date forward, all new transactions must be recorded in FreeAgent.
If you have a business bank account, link it to FreeAgent via the bank feed. If you don’t, open one — it will save you significant time on categorisation. See our cheapest MTD software guide for the full comparison of free and low-cost options, including which business accounts offer FreeAgent for free.
Step 2: Categorise transactions as they arrive
Set up a weekly routine — 10–15 minutes to review the transactions FreeAgent has imported via the bank feed, confirm the suggested categories, and add any missing transactions (cash, mileage, personal card purchases). FreeAgent has a mobile app that lets you do this from your phone, so you’re not losing the convenience of the phone app — you’re just using one that’s MTD-compatible.
If your turnover is under £90,000, you can use simplified reporting and skip expense categorisation entirely. Just mark each transaction as income or expense — no need to pick a category. This makes the weekly review even faster.
Step 3: Review and submit the quarterly update
At the end of each quarter, FreeAgent will notify you that your quarterly update is ready. It will show you the category totals (or just income/expense totals if you’re under £90k) that it has calculated from your digital records. You review the figures, check for any obvious errors, and click submit. FreeAgent sends the update to HMRC via API.
No tax is due at this stage — the quarterly update is informational only. Your tax is still due by 31 January and 31 July as under the current system. For the full deadline schedule, see our MTD quarterly updates guide.
Step 4: Submit your final declaration at year-end
After your fourth quarterly update, you submit a final declaration — this replaces the annual Self Assessment return. You can make adjustments at this stage: claim capital allowances, apply the trading allowance, correct any errors in the quarterly updates. For the full filing process, see our how to file MTD guide.
Common Misconceptions
“I can just submit totals like VAT”
One Reddit commenter said: “Only totals are being submitted to HMRC (just like VAT).” This is correct about what’s submitted, but misleading about what’s required. For VAT, you’re already keeping digital records of VAT-accounted transactions. For MTD for Income Tax, you need to create digital records of all business income and expenses — not just the ones that attract VAT. The submission is totals, but the records must be per-transaction.
“I can keep my phone app and just enter totals into FreeAgent”
You can’t. The digital links rule requires that records flow from recording to submission through digital links — no manual re-entry. If you’re keeping records in a non-MTD app and typing totals into FreeAgent, the digital link is broken. You need to keep your records in FreeAgent (or another MTD-compatible product) from the start.
The one exception is if your phone app can export data to FreeAgent via a digital link (CSV import, API transfer, or similar). In that case, you could keep using the phone app for recording and import the data into FreeAgent for submission. But this adds complexity and a potential point of failure. For most sole traders, switching to FreeAgent’s own app is simpler.
“HMRC will see every transaction”
No. HMRC receives category totals (or just income/expense totals if you’re under £90k), not individual transactions. They don’t see that you spent £4.50 at Costa Coffee or £12 at WHSmith. They see “total expenses: £1,247” for the quarter. The granular data stays in your software, not with HMRC.
“I need to upload receipts and invoices”
No. HMRC does not require you to upload receipts or invoices to your software for MTD purposes. You need to record the date, amount, and type of each transaction — that’s the digital record. You should still keep your receipts and invoices for your own records (HMRC can ask to see them during an enquiry), and most software lets you photograph and attach them to transactions, but it’s not a requirement of MTD.
The Bottom Line
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You must record every transaction — date, amount, and type (income or expense) — in MTD-compatible software. You cannot enter a single total for income and a single total for expenses.
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HMRC only receives totals — category totals (or just income/expense totals if you’re under £90k) in your quarterly update. They do not see individual transactions, receipts, or invoices.
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You can’t keep tracking in a separate app and just enter totals into FreeAgent. The digital links rule requires an unbroken digital trail from recording to submission. Move your record-keeping into FreeAgent (or another MTD-compatible product).
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FreeAgent automates the recording via bank feeds — transactions arrive automatically, you confirm categories (or skip categorisation if you’re under £90k), and FreeAgent generates the quarterly update from your digital records. The weekly time commitment is typically 10–15 minutes.
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Under £90,000 turnover, you can use simplified reporting (three-line accounts) and skip expense categorisation entirely — just record date, amount, and income/expense type. This is the biggest time-saver in MTD and most people don’t know about it.
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The quarterly update is not a tax return — no tax is due at the quarterly stage. You review the totals your software has generated and click submit. Tax is still due by 31 January and 31 July as under the current system.
For the full guide to MTD quarterly updates — deadlines, penalties, the three-line accounts simplification, and what records to keep — see our MTD quarterly updates guide. For the complete MTD software comparison, including free options and which business accounts offer FreeAgent for free, see our cheapest MTD software guide. For the step-by-step filing process from registration to final declaration, see our how to file MTD guide. For the digital links rule and why you can’t just copy-paste between systems, see our MTD software guide.