What digital records do I actually need to keep?
You need to record each individual item of business income and expense digitally — not just a periodic total — using software that's compatible with MTD for Income Tax. A plain spreadsheet with no compatible software connected to it generally isn't sufficient on its own.
Individual transactions, not just totals
The requirement is to keep a digital record of each transaction — a specific invoice, a specific expense — rather than one lump-sum monthly total typed into a spreadsheet cell. This is one of the most commonly misunderstood parts of MTD.
Where a spreadsheet still fits in
A spreadsheet can still be part of a compliant setup if it's connected to HMRC-recognised "bridging" software that can transmit the required data digitally — the spreadsheet on its own, disconnected from any submission software, is the part that falls short.
- Record each item of income and expense individually, not as a batch total
- Use software that's compatible with MTD for Income Tax — check HMRC's list of recognised products
- Keep records for the period HMRC requires, even after you've submitted an update
- Keep self-employment and property records separately, even if they're combined for the qualifying-income test
Frequently asked
Can I keep paper receipts as backup?
Keeping paper backups is generally fine as supporting evidence, but the digital record itself — the entry in compatible software — is what MTD requires, not the paper alone.
Does every single expense need its own digital entry?
Yes, in general — MTD is built around individual transaction-level digital records rather than periodic summaries, though check HMRC guidance for any specific simplifications that may apply.
What happens if my software stops being MTD-compatible?
You would need to migrate your records to a compatible product to remain compliant — this is worth checking before committing to any long-term software choice.
Read HMRC's official guidance ↗
Plain-English record entry, not a spreadsheet in disguise.
Recording things properly, without the busywork.
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