How to explain a Self Assessment refund from HMRC

This article describes how to explain a Self Assessment refund that has been paid into your bank account by HMRC.

Once the relevant bank transaction has been imported into your FreeAgent account via a bank feed or uploaded from a bank statement, you will need to explain it using the appropriate ‘Type’ and ‘Category’ as detailed below. You’ll see different options depending on whether your business is listed as a sole trader, partnership, LLP or limited company in FreeAgent.

Please note that FreeAgent supports the filing of a Self Assessment tax return to HMRC only if you are a sole trader or limited company director. If your business is a partnership or LLP, you can refer to the figures in FreeAgent, but you will need to file your Self Assessment tax return outside of FreeAgent, then explain the bank transaction as detailed below once your Self Assessment refund has been paid into your bank account.

You'll need to have level 6 access or above to your FreeAgent account to explain bank transactions. If you need to explain a Self Assessment payment that you've made to HMRC, please see this article.

1. Navigate to the relevant transaction

First, navigate to the ‘Banking’ tab at the top of the screen and select ‘Bank Accounts’ from the drop-down menu.


Choose the relevant bank account from the list.


Select the transaction that relates to the Self Assessment refund.


2. Choose ‘Money Received from User’ as the transaction ‘Type’

Select ‘Money Received from User’ from the ‘Type’ drop-down menu. Please note that this option will only be available for business bank accounts. You won’t see this option if the bank account has been marked as personal or for a user who has been allocated the role of ‘Accountant’.


3. Choose the relevant user

Select the relevant user from the 'Received from' drop-down menu.


4. Choose the appropriate transaction ‘Category’

The item you need to select from the ‘Category’ drop-down menu depends on your business type.

If your business is a sole trader, partnership or LLP, select ‘Capital Introduced’.


If your business is a limited company, select ‘Payment to Director Loan Account’.


5. Explain the transaction

Select ‘Explain Transaction’ to complete the process.


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