BrightBooks and BrightAccountsProduction now include a Simplified 3-Line Accounting option for self-employed users who have businesses below the VAT threshold. This allows you to submit your MTD ITSA quarterly returns by reporting just three figures: total income, total expenses, and net profit — no need to categorise expenses into multiple detailed categories.

Who Can Use Simplified 3-Line Accounting?

• Self-employed users with an annual turnover below £90,000
• Users not included in the Managing Serious Defaulters programme

Note:
You are responsible for confirming your eligibility. The system does not calculate turnover or validate eligibility in any way. No HMRC approval or notification is required to enable or disable this option.

How to Enable 3-Line Accounting

Accessing the Setting

1. Go to Settings
2. Select MTD for ITSA

3. Click on MTD Tax Setup

    

A new checkbox will appear when your Business Type is set to Self-Employed:

• Use simplified 3-line accounting (for businesses below VAT threshold)

What You Need to Know About the Setting

• The checkbox is unchecked by default (detailed accounting mode).
• You can enable or disable this option at any time, even after submitting returns.
  • When changing methods after submissions, an information message will appear:

“You have changed your accounting method. This is permitted by HMRC. Previous returns submitted using [previous method] will remain unchanged. Future returns will use [new method].”

• No turnover threshold or Managing Serious Defaulters validation is performed by the system.

What Does Simplified 3-Line Accounting Look Like?

When Enabled

Your quarterly return screen will collect three main figures, plus tax taken off trading income:

• Turnover: Automatically totals all income nominal groups.
• Total Expenses: Automatically totals all expense nominal groups (shown as positive values).
• Net Profit: Calculated as Turnover minus Total Expenses.
• Tax Taken Off Trading Income: Entered manually.

Validations:

• Negative income values display as £0.00 with a warning.
• Net profit can be positive or negative.
• No turnover threshold validation is performed.

Generating Supporting Reports for 3-Line Accounting Returns

To view or print a supporting report that matches your simplified 3-line accounting submission:

1. Navigate to General Ledger > MTD ITSA.
2. Select the relevant return period.
3. On the dropdown, you will see a Print/View option specifically for the 3-line accounting report format.

This report displays your quarterly return data in the simplified 3-line format, matching what was submitted to HMRC.

Additional Information

• You can switch between simplified and detailed accounting at any time with no transitional rules or penalties.
• Returns already submitted remain unchanged regardless of any subsequent method switches.
• No additional bookkeeping or compliance requirements are needed for 3-line accounting.
• The system does not enforce eligibility rules; please ensure your use aligns with HMRC guidance.

Frequently Asked Questions

Q: Can I switch back and forth between simplified and detailed accounting?
A: Yes. You can switch at any time without restrictions. Previous returns do not change, and new returns will follow your selected method.

Q: Does the system check if I’m eligible to use 3-line accounting?
A: No, eligibility checks are your responsibility. The system provides guidance but does not validate turnover or defaulter status.

Q: Is HMRC notified when I turn this option on or off?
A: No, HMRC is not notified via API when you enable or disable simplified 3-line accounting.