[Basic] How to manage account codes

Help guide series for our Basic Accounting product

1. Introduction to Account Codes & MTD

Account codes are essential for categorising your income and expenses. They drive the reporting within Clear Books and dictate exactly how your Making Tax Digital (MTD) for Income Tax quarterly updates are populated.

You can manage all your codes by navigating to Settings > Account codes.

Important: We strongly advise consulting a qualified accountant before adjusting any account codes. Assigning transactions to an incorrect account type (such as using an income account type for an expense transaction) will prevent those transactions from being included in your quarterly MTD updates.

How Account Codes Affect MTD Quarterly Updates

Your quarterly updates populate automatically based on the account codes assigned to your transactions. To ensure accurate reporting, you must strictly follow these rules:

• Income Transactions: Must be allocated exclusively to income account codes. Avoid using any expense-based account categories.

• Expense Transactions: Must be allocated exclusively to expense account codes. Avoid using any income-based account categories.

Note: While expenses typically represent outgoing funds and income represents incoming funds, occasional reversals like refunds or fees must still be categorised according to the strict rules above.

The Impact of Misconfiguration on MTD:

• Expense codes under income categories: If an expense account is configured under an income category and set to "show in purchases," its transactions will be recorded under Turnover (showing as positive or negative figures depending on the value).

• Income codes under expense categories: If an income account is configured under an expense category and set to "show in sales," its transactions will generally be recorded as an expense (or excluded entirely from MTD updates).

2. Managing Your Account Codes

Creating New Account Codes & Types

1. Go to Settings > Account codes and click Create account code.

2. Enter a unique Account name.

3. Choose the appropriate Account type. (If you need a new type, click the Add new account type button to create one. You will need to assign it to an uneditable master category).

4. Set the visibility:

• • Check Show in sales to make it visible when recording income or explaining money in.

  • Check Show in purchases to make it visible when recording expenses or explaining money out.

5. Click Save new account.

Editing Existing Account Codes

To modify an account, click the Edit link in the "Actions" column next to the relevant code. You can change the "Account type" on most accounts, with some system exceptions.

Restricted Accounts:

You cannot change the "Account type" for the following system-reserved accounts:

• All default system-generated Balance Sheet accounts, bank accounts, employee expenses, and shareholder dividend accounts.

• Fixed asset account codes (if already used on a transaction), and default fixed asset depreciation codes (4010001 - 4).

• Default Salaries codes (4001001 - 5).

• Specific core system codes: Revenue (1001001), Cost of sales (2001001), Other income (3001001), Reclaimed expenses (3001002), General admin (4004001), Entertaining staff (4008001), Entertaining clients (4008002), Bad debt expense (4011001), Amortisation (4012001), Forex movement (5001001), Interest income (5501001), Interest expense (6001001), Bank charges (6001002), and Corporation tax (6501001).

Tip: If an account has the wrong Account Type but has already been used, hide it (see below) and create a brand new account with the correct type.

Hiding Account Codes

If you want to stop an account code from appearing in your drop-down menus without deleting it, simply click Edit, uncheck both the Show in sales and Show in purchases checkboxes, and save your changes.

Deleting Account Codes

Click the Delete link in the "Actions" column to remove an account.

Note: You cannot delete system-reserved accounts or any account that has already been used for an income or expense transaction.

3. MTD Mapping for businesses on Sole Trader plans

Clear Books uses an asterisk wildcard (*) to denote a range of codes. For example, 100**** means any account code beginning with 100 is included in that mapping.

Consolidated expenses

The following tables detail the mapping of the standard Clear Books sole trader account codes to the MTD for Income Tax categories.

Business income

Business expenses

Full expenses

The following tables detail the mapping of the standard Clear Books sole trader accounts codes to the MTD for Income Tax categories.

Business income

Business expenses

4. MTD Mapping for businesses on Property plans

Clear Books uses an asterisk wildcard (*) to denote a range of codes. For example, 100**** means any account code beginning with 100 is included in that mapping.

Consolidated expenses

The following tables detail the mapping of the standard Clear Books property account codes to the MTD for Income Tax categories.

Business income

Business expenses

Full expenses

The following tables detail the mapping of the standard Clear Books property accounts codes to the MTD for Income Tax categories.

Business income

Business expenses