How do I add a tax category to my transaction for the Making Tax Digital submission tool?

To add a tax category to a transaction in the Monzo app, you must first have set up the Monzo Making Tax Digital for Income tax tool, which you can set up from Making Tax Digital in the app.

Some transactions cannot be given a tax category, such as transactions from the Connected Accounts feature or transfers to and from Pots.

Once you have onboarded to Monzo’s Making Tax Digital tool, you can add a tax category by:

From here, you simply tap on Add tax category. This allows you to add a category to the transaction so that it can be sent to HMRC in your quarterly update. Next you can choose whether the tax category applies to:

Please note that if you use the From now on or All payments rules, they will turn opposite transaction types from the same payee into refunds. This means applying either rule to an income transaction marks any expenses as refunds, while applying either rule to an expense transaction marks income as refunds.

You can also split the transaction if it needs multiple categories, or if a portion of the funds was not used for your business. You can learn more about splitting a transaction for Making Tax Digital here.

If you have more complex transactions to log (such as vehicle mileage, CIS or payments with funds deducted before they reached your account, please read through our guide here