Three Line Accounting

Introduction

• Three line accounting is a simple way of reporting income and expenses from self-employment or from UK property.
• The main benefit of doing this is to save time and cost of reporting to HMRC on your Self-Assessment Tax Return (SATR).

What is Three Line Accounting?

• This is your income and expenses reported in 3 lines:
  • Add: Income
  • Less: Total of Allowable Expenses
  • Equals: Net Profit or Loss before tax

Who can use Three Line Accounting?

• You can use it if your annual turnover from self-employment or income from UK property is below the VAT registration threshold.
• You can use the three line account on:
  • the self-employment pages (short and full) and UK property pages of the Self Assessment Tax Return
  • the self-employment and UK property sections of the Self Assessment Short Tax Return
  • the trading and professional income section and UK property pages of the Self Assessment Partnership Tax Return.

Who cannot use Three Line Accounting?

• You can’t use the three line account for:
  • income and expenses from land and property abroad
  • employment income and expenses
  • any income shown on the Self Assessment Trust and Estate Tax Return.
  • if you have been told you are in the Managing Deliberate Defaulters programme.

Record Keeping

• Must keep full and accurate records of your income and expenses.
• This is a legal requirement.
• Important you have a proper system in place and update the information regularly