What Counts as an MTD Digital Record?
An MTD digital record is an entry of income or expense created and stored in compatible software. Functioning like a single ledger line (such as a customer payment or rent receipt), these underlying entries are aggregated by your software to compile your required quarterly update.
Digital Record vs Supporting Evidence
Distinguishing MTD digital records from supporting evidence avoids common confusion.
The digital record is the entry in your software capturing amount, date and category.
The supporting evidence is the underlying document such as an invoice, a receipt, or a bank statement.
HMRC requires both. You create the digital record in compatible software and keep the originals or copies exactly as you always have for Self-Assessment.
Digital Record vs Digital Link vs Quarterly Update
Digital record: an individual software entry capturing income or expense details.
Digital link: an automated electronic data transfer between two software applications.
Quarterly update: a summary compiled from digital records and sent to HMRC
All-in-one software such as RentalBux requires no digital links. Such links are required only when transferring data across multiple products.
Who Has to Keep MTD Digital Records?
You, or your agent, must maintain MTD digital records from 6 April 2026 if your 2024/25 tax return showed qualifying income over £50,000 (your gross income from self-employment and UK property, before expenses).
Under Schedule A1 of the Taxes Management Act 1970, HMRC regulations apply this obligation to any "relevant person" (unincorporated businesses and landlords). HMRC will automatically register eligible taxpayers for 2026/27 starting in September 2026 if they have not signed up.
See our guides to who MTD for Income Tax applies to and MTD exemptions for the full picture.
What Must Go Into Your Digital Records?
Field | What to record |
|---|---|
Amount | The value of the income received or expense incurred |
Date | When the income was received or the expense was incurred |
Category | The type of income or expense, using Self-Assessment categories |
Self-employment income: sales, takings and fees.
Self-employment expenses: stock, travel, office costs, financial costs.
Property income, chargeable under Part 3 of ITTOIA 2005: rent, lease premiums, reverse premiums and inducements.
Property expenses: repairs, maintenance and other services.
If You're a Sole Trader
Sole traders running multiple self-employment businesses must treat each trade separately. They are required to maintain a dedicated set of MTD digital records and submit a separate quarterly update for each trade.
If You're a Landlord
UK property: all your UK properties count as one UK property business, so you don't need separate records for each property. Your share of any jointly let UK property sits inside that one business.
Foreign property: create separate digital records for each individual foreign property, including your share of any jointly let one, though they're still combined into one quarterly update as a single foreign property business.
Rent-a-Room: in 2026/27, digital records cover all your property income, including Rent-a-Room income, if you claimed the relief alongside other UK property income on your last return, or your gross UK property income was above the Rent-a-Room threshold.
What Can You Choose Not to Keep Digitally?
Other income: no digital records needed for your share of partnership profit, dividends, State Pension or private pensions.
Income below the allowances: none needed for self-employment or property income below the trading or property income allowance, provided it wasn't declared on your previous return.
Simplified expenses: none needed for actual expenses if you're sure you'll use the simplified scheme; if unsure, record everything and adjust later.
Disallowable expenses: record just the allowable portion, or the total plus the disallowable element.
Part capital, part revenue: record the full amount and adjust before you submit, or record just the revenue element.
Do You Still Need to Keep the Paper Trail?
Yes, or a copy. MTD digital records replace how you record income and expenses, not the evidence behind them. You don't need to scan every receipt purely to create the digital record. The record is the software entry, and a scan is useful evidence, not a requirement.
If your software uses automated bank feeds, you must review them for missing details or unassigned categories, as you remain legally responsible for the accuracy of your MTD digital records.
Can You Use a Spreadsheet for MTD Digital Records?
You can use spreadsheets for MTD digital records, provided they connect to compatible bridging software through digital links. Data transferred between separate sheets must use linked cell formulas rather than manual re-typing or copy-pasting. While spreadsheets suit low-volume businesses, dedicated software with automated bank feeds provides a safer, more automated solution for higher transaction volumes.
What Counts as a Digital Link?
COUNTS
Linked cells in a spreadsheet
Emailing a spreadsheet for import into other software
XML/CSV import and export, or file download/upload
Automated data transfer or an API transfer
Transferring records via a portable device for import
DOES NOT COUNT
Writing the same figure out again elsewhere
Copy and paste of a record once it's been sent in a quarterly update
Worth dwelling on: once a digital record has been created and sent in a quarterly update, you must not manually move it, whether within your own software or into another product.
Digital links are unnecessary for non-qualifying income (dividends and savings), booking or till systems, tax software pulling directly from HMRC, or co-owners' separate files.
Who Can Use Simpler Categories?
If your self-employment or UK property turnover is below the VAT registration threshold (currently £90,000), you may categorise records in less detail: simply income or expense, rather than the full Self-Assessment categories.
However, residential landlords using simpler categories must still record mortgage interest separately. Multiple income sources must each individually stay under £90,000 to qualify (excluding foreign property income), while retailers may record daily gross takings instead of itemising every sale.
When Must MTD Digital Records Be Created?
You must create MTD digital records before filing your quarterly update or prior to its official deadline, whichever comes first, though HMRC recommends logging transactions as close to their actual date as possible.
Accounting period ending 5 April: records from 6 April.
Accounting period ending 31 March: records from 1 April, using calendar update periods. This is fixed once your first quarterly update is sent.
Signing up partway through the year: catch up from the start of the tax year. No penalties apply for a missed 2026/27 deadline; see our MTD penalties guide for what changes afterwards.
How Do You Correct a Digital Record?
Update or add the entry in your software so it is included in your next quarterly update.
Correct the record and resend the update, or adjust the category total and update your records to match.
Correct the spreadsheet, then re-run the digital link.
How Long Must You Keep MTD Digital Records?
You must retain MTD digital records for at least 5 years after the 31 January submission deadline for the relevant tax year, mirroring standard Self-Assessment retention rules. For the 2026/27 tax year, where the submission deadline is 31 January 2028, your MTD digital records and supporting evidence must be stored until at least 31 January 2033.
Worked Example: Two Common Scenarios
Sole Trader: Freelance Photographer
Date | Description | Amount | Type and category |
|---|---|---|---|
03/05 | Wedding shoot, Invoice 014 | £1,500 | Income: fees |
09/05 | Camera lens | £620 | Expense: equipment |
14/05 | Train fare to client | £46 | Expense: travel |
21/05 | Portrait session, card | £220 | Income: fees |
30/05 | Studio hire | £90 | Expense: premises costs |
Landlord: Two UK Flats, Held Solely
Date | Description | Amount | Type and category |
|---|---|---|---|
01/05 | Rent received, Flat A | £950 | Income: rent |
01/05 | Rent received, Flat B | £800 | Income: rent |
11/05 | Boiler repair, Flat A | £180 | Expense: repairs and maintenance |
20/05 | Letting agent fee | £175 | Expense: management fees |
Both flats sit in one UK property business, with one set of records and one quarterly update. If either flat were jointly let, each owner records only their own share, and could use the joint-ownership easement above on the income side.
These figures are illustrative. Your own position depends on your specific income and expenses.
Common MTD Digital Record Mistakes
Retyping figures between systems breaks the digital link. Use imports, linked cells or an API instead.
Using copy and paste after sending an update is not allowed once a record has gone into a quarterly update.
Forgetting separate businesses means missing records for a second self-employment source.
Leaving records until the deadline makes errors harder to catch.
Not keeping the original records: the digital record doesn't replace invoices and bank statements.
Trusting the bank feed without checking: you're responsible for accuracy, not your software.
Itemising jointly owned property unnecessarily when the easement above would save the work.
What to Do Now
Conclusion
MTD digital record-keeping boils down to entering the amount, date, and category into compatible software while retaining your original supporting evidence. Specific technical areas, such as joint property ownership, spreadsheet digital links, and transaction corrections, follow strict, defined statutory rules rather than open-ended choices. Establishing your software and categorisation early avoids time-pressured backdating and turns quarterly reporting into routine administrations.
FAQ Section
This guide is for general information only and does not constitute tax advice. Your circumstances may alter the outcome. Speak to a qualified adviser before acting.
