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.
Regulatory information about Making Tax Digital for Income Tax, which applies to qualifying individuals with self-employment or property income — not to every business. It is not a description of Quarter Day's launch scope.
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.
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