What records do I need to keep for Making Tax Digital?
A plain-English guide to the digital records you must keep for Making Tax Digital for Income Tax, the categories involved, and bridging software for spreadsheets.
Quick answer: For Making Tax Digital (MTD) for Income Tax you must keep digital records of your business income and expenses — recording the date, amount and category of each transaction — in HMRC-compatible software, or in a spreadsheet linked to HMRC by bridging software. These records feed your four quarterly updates and your final declaration. See how Ledgers keeps your records MTD-ready — or read the full guide below.
One of the biggest shifts under MTD for Income Tax is how you keep your records. Paper notebooks and shoeboxes of receipts are out; digital records are in. If you are mandated (from 6 April 2026 for qualifying income over £50,000), getting your records right is the foundation for every submission you make.
This guide explains exactly what counts as a digital record, the categories involved, your options if you love spreadsheets, and how long to keep everything.
What counts as a digital record?
A digital record is a record of a transaction kept in a digital form. For MTD you must keep digital records of your business income and expenses, and for each transaction that means capturing the:
- Date of the transaction
- Amount
- Category it belongs to
These records must be held in compatible software, or in a spreadsheet that is connected to HMRC using bridging software. The point is that the data flows digitally from your records to HMRC — you cannot keep your figures on paper and simply type a total into a website at the end of each quarter.
Remember that HMRC does not provide its own software, so you will be using a commercial product to hold these records. If you are not yet sure whether MTD applies to you, the scope checker confirms your status in under a minute.
Income and expense categories
Your quarterly updates are built from cumulative totals by category, so categorising as you go is essential. In practice that means recording each piece of income and each expense against the right category so the software can total them correctly.
- Income — the money your business brings in from self-employment and/or property.
- Expenses — your business costs, recorded against their relevant categories.
When every transaction has a date, amount and category, your software can produce accurate category totals at any point in the year. That makes the quarterly updates a quick review-and-send job rather than a scramble. To see how those totals turn into a submission, read how to submit a quarterly update.
Bridging software for spreadsheet users
If you already run your bookkeeping in a spreadsheet, you do not necessarily have to abandon it. Bridging software links a spreadsheet to HMRC so that the figures can be submitted digitally.
The crucial requirement is the digital link: the data must pass from your spreadsheet to HMRC digitally, without being manually retyped along the way. As long as that link is preserved, a spreadsheet plus bridging software is a valid way to meet the digital-records rules.
That said, all-in-one MTD software often makes life simpler, because the records, the category totals and the submissions all live in one place. Whether you prefer a spreadsheet-plus-bridge or a single tool, see how Ledgers handles it.
How long to keep your records
Keeping digital records is not just about hitting the quarterly deadlines — your records also support your final declaration by 31 January after the tax year, where you finalise your figures and claim allowances and reliefs. Well-kept records make that final step far smoother, because the underlying numbers are already complete and categorised.
Treat your digital records as the backbone of your whole MTD year. The four quarterly updates and the final declaration all draw on the same set of records, so the better they are maintained, the easier every submission becomes — and the lower your risk of errors that could lead to penalties.
Why good records protect you from penalties
MTD introduces a points-based late-submission system (four points triggers a £200 charge) and separate, escalating late-payment charges. Accurate, up-to-date digital records help you submit on time and with confidence. While 2026/27 is a soft-landing year for quarterly-update points, building solid record-keeping habits now is the best way to stay on the right side of the rules for years to come.
Getting your records ready: a quick checklist
- Choose HMRC-compatible software (or a spreadsheet plus bridging software).
- Record every transaction with its date, amount and category.
- Separate income and expenses clearly.
- Keep records digitally with the link to HMRC intact — no manual retyping.
- Review your category totals before each quarterly deadline.
- Keep everything to support the final declaration by 31 January.
If you have not registered yet, our step-by-step registration guide walks you through signing up.
Frequently asked questions
Do I have to keep digital records, or can I stay on paper? You must keep digital records of your business income and expenses in compatible software, or in a spreadsheet linked to HMRC by bridging software. Paper-only records do not meet the MTD requirements.
What information do I need for each transaction? The date, the amount, and the category. That is what lets your software produce accurate cumulative totals for your quarterly updates.
Can I keep using my spreadsheet? Yes, provided you use bridging software to create a digital link between the spreadsheet and HMRC, so figures are submitted digitally rather than retyped.
Does HMRC give me software to keep records in? No. HMRC does not provide its own software. You choose a compatible commercial product from HMRC's "find compatible software" list.
How do my records connect to my submissions? Your digital records feed the four quarterly updates (cumulative totals by category) and the final declaration by 31 January. See how to submit a quarterly update for the mechanics.
Guidance only, not tax advice. Based on HMRC rules as at June 2026.
Related guides: How to register for MTD as a sole trader · How to submit a quarterly update to HMRC · Do I need an accountant for MTD?