Consolidated vs Itemised Expenses in Your MTD Quarterly Update

When you file an MTD quarterly update, you report expenses one of two ways: consolidated (one figure) or itemised (category by category). Choosing the right one — and knowing when you have no choice — keeps your submissions clean and correct.

The two ways to report expenses

• Consolidated expenses — you enter a single total for all your business expenses. Simple and quick.
• Itemised (full) expenses — you break expenses into categories, each entered separately.

The VAT-threshold rule

The choice isn't entirely free. HMRC only allows consolidated expenses if your turnover is below the VAT registration threshold:

The VAT registration threshold is currently £90,000 (always confirm the current figure). Below it, you may report consolidated expenses; at or above it, you must itemise.

Two practical consequences:

• If you're a smaller business under £90,000, consolidated reporting is a legitimate shortcut.
• If your turnover crosses the threshold during the year, you lose the consolidated option and need to switch to itemised. Good software should flag this rather than silently letting you file figures you're no longer entitled to use.

Itemised categories

When you itemise, you'll typically report categories such as:

• Cost of goods
• Payments to subcontractors
• Wages and staff costs
• Car, van and travel expenses
• Premises running costs
• Repairs and maintenance
• Admin costs
• Advertising and business entertainment
• Interest on loans and finance charges
• Professional fees
• Other expenses

Each is entered as a year-to-date (cumulative) figure, just like your income.

What "disallowable" means

Itemised reporting introduces a concept worth understanding:

For each category, you enter the full cost and a paired disallowable amount — the part of that cost that can't be deducted for tax.

The classic example is mixed private/business use. If a van is used 30% for personal trips, then 30% of its running costs are disallowable: you record the whole cost, and separately flag the 30% that tax relief doesn't apply to. Other examples include the non-business portion of a phone bill, or client entertainment (which is generally disallowable).

Reporting the disallowable slice lets HMRC's calculation arrive at the correct taxable profit — the full cost minus the disallowable part.

Consolidated vs itemised: which should you pick?

	Consolidated	Itemised
Allowed when	Turnover under £90,000	Any turnover (required over £90,000)
Effort	Low — one figure	Higher — category by category
Detail for you	Minimal	Clear breakdown of where money goes
Disallowable amounts	Not separated	Captured per category

If you're comfortably under the threshold and want speed, consolidated is fine. But many sole traders and accountants itemise anyway, because the category breakdown is useful management information and makes the year-end adjustments easier.

A note on "not entered" vs "zero"

Whichever method you use, remember HMRC distinguishes a blank field from an explicit £0.00. Only enter zero where you truly mean a nil amount for that category — don't let empty inputs default to zero.

How ThisQuarter helps. ThisQuarter shows one expense method at a time per business, pairs each itemised category with its disallowable amount, and flags when turnover crosses the consolidated-expenses threshold — so you always file the method you're entitled to use. See how it works.

The bottom line

Under the VAT threshold, consolidated expenses are a valid shortcut; at or above it, you must itemise, pairing each category with its disallowable portion. Pick the method you're entitled to, use it consistently, and mind the blank-versus-zero distinction.