How to Keep Digital Records for MTD Income Tax

What Records You Need for MTD

Under MTD for Income Tax, you must keep your business records digitally. This means your records of income and expenses must be stored in electronic form — not on paper.^[1]

Digital records can be kept in:

Accounting software (e.g. GoFile, Xero, QuickBooks)
Spreadsheets (e.g. Excel, Google Sheets) — with compatible bridging software to submit to HMRC
A combination of software and spreadsheets, as long as they’re digitally linked

What HMRC Requires You to Record

At a minimum, your digital records must include the following for each transaction:^[1]

For Income (Sales)

Date of the transaction
Amount received
Category of income (e.g. sales, services, rental income)

For Expenses (Purchases)

Date of the transaction
Amount paid
Category of expense (e.g. office costs, travel, stock)

You do not need to store individual receipts digitally. HMRC requires you to keep source documents (receipts, invoices) for your records, but these can be paper or digital. What must be digital is the summary record of your income and expenses that you use for quarterly submissions.^[5]

Using Spreadsheets

Spreadsheets are perfectly acceptable for keeping MTD digital records. Many sole traders and landlords already track income and expenses in Excel or Google Sheets.^[2]

However, there’s one important requirement: you cannot submit directly to HMRC from a spreadsheet. You must use compatible software to convert your spreadsheet data into the format HMRC requires and submit it electronically.^[3]

GoFile and spreadsheets: GoFile accepts CSV uploads, so you can maintain your records in a spreadsheet and import them into GoFile for submission. Try it free.

The Digital Link Requirement

If you use more than one piece of software (e.g. a spreadsheet for record-keeping and separate software for submission), there must be a digital link between them.^[1]

A digital link means data is transferred electronically — not manually retyped. Acceptable digital links include:

CSV or Excel file import/export
Copy and paste between applications
API connections between software
Linked cells in spreadsheets

What is not a digital link: printing figures from one system and manually typing them into another.

Choosing Compatible Software

Your software must be HMRC-recognised for MTD for Income Tax — GoFile’s MTD Income Tax software is one option. You can check the full list on GOV.UK.^[3]

Compatible software must be able to:

Store digital records of income and expenses
Submit quarterly updates to HMRC
Submit the Final Declaration at year-end
Receive information from HMRC (e.g. tax calculations)

Common Record-Keeping Mistakes

Based on HMRC guidance and common practice, here are the most frequent errors to avoid:

Mixing personal and business transactions — keep a separate bank account or clearly mark business transactions
Not categorising expenses — HMRC requires expenses to be categorised (not just a single total)
Manual re-entry between systems — breaks the digital link requirement
Leaving records until year-end — under MTD you must update quarterly, so staying on top of records is essential
Not keeping source documents — even though the records are digital, you still need to retain receipts and invoices for at least 5 years^[4]

How Long to Keep Records

You must keep your records for at least:^[2]

5 years after the 31 January submission deadline of the relevant tax year
Longer if HMRC opens an enquiry into your return

For example, records for the 2026/27 tax year (deadline 31 January 2028) should be kept until at least 31 January 2033.

Getting Started

If you’re starting from scratch, the simplest approach is:

Open a separate business bank account (or clearly tag business transactions in your personal account)
Download your bank statements as CSV files each quarter
Categorise income and expenses in a spreadsheet
Import into HMRC-recognised software like GoFile for submission

Frequently Asked Questions

What digital records must I keep for MTD?

For each transaction, you must digitally record the date, the amount, and the category (such as sales, services, office costs, or travel). You need separate records for income and expenses.

Can I use spreadsheets for Making Tax Digital?

Yes. Spreadsheets like Excel or Google Sheets are perfectly acceptable for keeping MTD digital records. However, you must use compatible software (such as GoFile) to submit the data to HMRC, and there must be a digital link between your spreadsheet and the submission software.

Do I need to store receipts digitally for MTD?

No. HMRC requires your summary records of income and expenses to be digital, but source documents like receipts and invoices can be kept on paper. You must still retain them for at least 5 years after the 31 January filing deadline.

What is the digital link requirement?

If you use more than one piece of software, data must be transferred electronically between them — not manually retyped. Acceptable digital links include CSV import/export, copy and paste, API connections, and linked spreadsheet cells.

Sources

Use Making Tax Digital for Income Tax: create digital records — GOV.UK
Making Tax Digital for Income Tax — GOV.UK
Choose the right software for Making Tax Digital for Income Tax — GOV.UK
Expenses if you're self-employed — GOV.UK
Overview of Making Tax Digital — GOV.UK