MTD Digital Records: What You Actually Have to Keep, and What Counts

Making Tax Digital is usually explained as a filing change: quarterly updates instead of one annual return. But the obligation that actually changes your week is the one underneath it — every business transaction has to exist as a digital record, in software, before the quarterly update goes in. Most of the confusion around MTD comes from mixing up that record with the receipt behind it.

This guide is only about the record-keeping half. For thresholds, phases and the overall shape of the regime, start with the Making Tax Digital guide; for what happens when it goes wrong, see MTD penalties.

Key Takeaways

• A digital record is a software entry with three fields: amount, date, and category. It is not the receipt itself
• You are not required to scan every receipt — but you must still keep the original or a copy as evidence, for at least 5 years after the 31 January deadline
• Under £90,000 turnover you only need to mark each transaction as income or expense; above it, full Self Assessment categories
• Records must be in place before the quarterly update deadline, or before you send the update, whichever is first
• Moving figures between products by hand — retyping, copy-paste — breaks the digital link rule; imports, APIs and linked spreadsheet cells do not
• A spreadsheet is legal, but it is the setup most likely to fail on the deadline and digital-link rules

What HMRC Means by "Digital Record"

HMRC's guidance is narrower than most articles make it. When you create a record of income or an expense, you must record:

• the amount
• the date the income was received or the expense incurred
• the category — which categories depends on the type of business

That is the whole requirement per transaction. It has to be created in functional compatible software — or a spreadsheet digitally linked to one — and it has to be created "as close to the date of the transaction as possible".

What HMRC does not require:

• A digital image of the receipt or invoice attached to each entry
• Any accounting or tax adjustment at the point of recording
• Individual records to be sent to HMRC. Quarterly updates carry category totals only — HMRC's own wording is that it "will not receive details of individual digital records, such as a receipt or invoice"

So the record is small. The reason it still matters is timing: it must exist for every transaction in the period before the update deadline or before you actually send the update, whichever comes first. Reconstructing a quarter from a bank statement the night before is exactly the behaviour the rule is designed to stop.

The Record Is Not the Evidence — You Need Both

This is the point almost every MTD explainer blurs, and it drives most of the "do I have to scan everything?" questions.

Two separate obligations sit on top of each other:

HMRC's guidance says you "still need to keep original records or supporting documents (or copies of them)". Nothing in MTD makes a shoebox of paper receipts illegal. What it does is make the shoebox useless on its own, because the shoebox does not create the digital record.

In practice this means you have three workable setups:

1. Paper receipts + software entries typed by hand. Compliant, but every receipt is handled twice, and the digital record is only as timely as your discipline.
2. Digital capture that creates the record. Photograph or forward the receipt; the amount, date and merchant are read from it and become the entry. One step produces the record and stores the evidence behind it. This is what MTD-ready record keeping is built around.
3. Bank feed as the record, receipts kept separately. Every bank line becomes an entry. Fine for income and card spend; falls apart on cash, personal-card purchases and split transactions, and you still need the receipts on a compliance check.

Whichever you pick, the retention rule is unchanged from Self Assessment: at least 5 years after the 31 January submission deadline for that tax year. HMRC's page on record keeping requirements covers the wider set — bank statements, invoices issued, mileage logs — that MTD does not replace.

Can a bank statement stand in for a receipt?

Sometimes, and MTD does not change the answer. A bank line proves money left; it does not prove what for or that it was wholly for business. We have a separate guide on whether HMRC accepts bank statements as receipts — the short version is that they are acceptable evidence for some costs and weak evidence for anything HMRC might question.

The Under-£90,000 Simplification

If your turnover for an income source is below £90,000, HMRC allows "simpler categorisation": for a sole trader, each record only needs to say whether the transaction is income or an expense. You do not have to assign each cost to a Self Assessment expense category during the year.

Once turnover for that source reaches £90,000, every record for it must be categorised in full.

Two things worth knowing before you rely on this:

• It is a recording simplification, not a retention one. You still need the receipt for every cost you claim.
• Most people end up categorising anyway, because the Final Declaration still wants the breakdown, and doing it once, when the receipt is in front of you, is faster than doing it in January from a list of amounts.

There are two further simplifications for specific cases:

• Retailers may create a digital record of daily gross takings rather than each individual sale
• Jointly let property can be recorded as a single monthly record per category rather than transaction by transaction — see the landlords guide for how the joint-ownership rules work

Digital Links: Where the Data Is Allowed to Travel

Once a figure exists as a digital record, any movement of that figure — into another product, into a summary, to HMRC — has to happen digitally.

HMRC lists what counts as a digital link:

• Linked cells within a spreadsheet, or between spreadsheets
• XML or CSV import and export
• API connections between products
• Automated data transfer

And what does not:

• Typing a total from one system into another
• Copy-and-paste between a spreadsheet and your accounting or filing software

You are explicitly allowed to use more than one product — one to keep records, another to submit — as long as the handoff between them is one of the digital methods above. That is the shape most sole traders and landlords will end up with: a capture tool that creates the records, exporting into whichever HMRC-recognised product files the update. The MTD software guide covers how to check that the second half of that chain actually submits.

The Spreadsheet Trap

A spreadsheet is legal under MTD. Plenty of guidance says so, and it is true. It is also the setup most likely to fail one of the two rules above, for reasons that only show up under pressure:

• The deadline rule. The digital record must exist before the update deadline or before you send. A spreadsheet that gets filled in from bank statements once a quarter produces records that are, technically, all created on the day you catch up. If HMRC ever asked when the records were made, the file's own history answers.
• The digital-link rule. The spreadsheet total has to reach the filing product without being retyped. That means bridging software or a proper import — and the moment you paste a figure into a submission form, the chain is broken.
• The evidence rule. The spreadsheet holds amounts. The receipts still have to be somewhere, matched to those rows, five years later.

None of this makes spreadsheets non-compliant. It makes them compliant only with more discipline than most people apply, at exactly the moments — quarter end, a compliance check — when the discipline is tested.

What a Compliant Record Looks Like in Practice

Six transactions a typical sole trader or landlord sees in a quarter, and what the digital record for each needs:

The pattern: the record itself is trivial. The work is capturing it at the time and keeping the evidence next to it. Costs that arrive on paper, by email, or on a personal card are where records go missing, because nothing in a bank feed reminds you they happened.

Correcting a Record After the Fact

Mistakes in digital records are expected and the fix is mundane:

• Correct it during the tax year and it flows through in your next quarterly update — updates are cumulative, so the revised total simply replaces the old one
• Correct it after the fourth update by resending that update or adjusting the category totals in your software, before you make any tax adjustments for the Final Declaration

There is no separate amendment process for the record itself. Change the entry, let the next update carry it. Detail on how updates and corrections fit together is in our quarterly update checklist.

Setting This Up So It Runs Itself

If your records are currently a bank feed plus a drawer, the smallest change that gets you compliant is closing the receipt gap — the costs that never reach the bank feed cleanly:

• Capture receipts when they arrive. A photo from your phone, or a connected inbox that pulls email receipts in automatically. Each capture becomes the digital record with amount, date and merchant already filled in.
• Match bank lines to receipts as you go, so the entry and the evidence are linked before quarter end rather than reconstructed after it.
• Export digitally into your filing product. CSV or an accounting integration — never a retyped total.

That is the setup MTD-ready record keeping describes in more detail: SparkReceipt holds the digital records and the receipts behind them; your HMRC-recognised software sends the update. Same three fields HMRC asks for, created at the moment the cost happens instead of the week the update is due.

MTD Digital Records FAQ

Do I have to scan every receipt for Making Tax Digital?

No. MTD requires a digital record of the transaction — amount, date, category — not an image of the receipt. You do still have to keep the receipt (paper or digital) as evidence for at least 5 years after the 31 January deadline. Capturing it digitally simply does both jobs at once.

Is a spreadsheet a valid digital record?

Yes, if it is digitally linked to HMRC-recognised software for submission and the entries are made in time. It is compliant; it is also the setup most exposed to the timing and digital-link rules.

Do my records have to be up to date every day?

HMRC says records should be created "as close to the date of the transaction as possible", and they must exist before the quarterly update deadline or before you send the update, whichever is first. There is no daily obligation, but a quarter's worth of catching up in one sitting is what the rule is aimed at.

What if my turnover is under £90,000?

You can record each transaction as simply income or expense rather than by full category. Once turnover for that income source reaches £90,000, full categorisation applies to it.

Does HMRC see my individual receipts or transactions?

Not through quarterly updates. Updates carry totals per category. HMRC can ask for underlying records and evidence during a compliance check.

How long do I keep MTD records?

At least 5 years after the 31 January submission deadline for the tax year they relate to.

What is a digital link?

Any transfer of data between products that does not involve manual re-entry — linked spreadsheet cells, CSV/XML import, API connections, automated transfers. Copy-paste and retyping are not digital links.

Record-keeping requirements, the £90,000 simplification, digital-link rules and retention periods verified against HMRC's "Use Making Tax Digital for Income Tax: keep digital records" guidance as of August 2026. Tax rules change — check current HMRC guidance and speak to an accountant about your own position before acting on anything here.