Making Tax Digital for Income Tax / Lesson 4 of 7
Digital records that satisfy the rules
Is a spreadsheet enough? Sometimes. Here is exactly when.
The short answer
- ✓ Each transaction must be recorded digitally with date, amount and category
- ✓ A spreadsheet is fine if bridging software carries the figures across digitally
- ✓ Retyping totals by hand breaks the digital link and is not compliant
- ✓ Self-employment and property need separate records and separate updates
What "digital records" means
Under MTD you must record each item of income and expenditure digitally, and there must be an unbroken digital link from those records through to what is submitted to HMRC. No retyping figures from one system into another by hand.
The date
The amount
The category it belongs to
Recorded digitally, per transaction.
Not a monthly total typed in at the end.Is a spreadsheet allowed?
Yes, but with a condition that catches people out. A spreadsheet is acceptable as your record-keeping system, provided it connects to HMRC through bridging software that carries the figures across digitally.
What is not acceptable is keeping a spreadsheet and then typing the totals into something else. That manual step breaks the digital link, and the digital link is the actual requirement.
| Approach | Acceptable? |
|---|---|
| Full accounting software | Yes |
| Spreadsheet plus bridging software | Yes |
| Spreadsheet, totals typed into a portal by hand | No, the digital link is broken |
| Paper records typed up quarterly | No |
| Photographs of receipts, with amounts recorded digitally | Yes, the digital record is what matters |
Separate records per business
If you have both self-employment and property income, each is a separate business for MTD. That means separate digital records and separate quarterly updates for each. A landlord who is also a freelancer files two sets, not one combined set.
The bit HMRC does not spell out
Receipts themselves do not have to be digital. The record of the transaction must be, but you are not required to scan every piece of paper. Plenty of people believe MTD outlaws paper receipts entirely and buy scanning equipment they do not need.
That said, photographing receipts as they arrive remains a good idea for a reason that has nothing to do with MTD: thermal till receipts fade to blank, often within a year, and a faded receipt is not evidence.
The habit that makes it work
- One bank account used only for the business, so the statement is most of the record
- Record transactions weekly, not quarterly, so an update is a review rather than a project
- Categorise as you go, because categorising six months of entries at once is where errors enter
- Reconcile to the bank at each quarter end, so mistakes surface in weeks rather than years
Common mistakes
- Breaking the digital link. Retyping figures by hand defeats the whole requirement.
- Recording monthly totals rather than transactions. The rule is per item.
- Combining property and self-employment records. They are separate businesses.
- Assuming paper receipts are banned. They are not, only the record must be digital.
Try it on your own numbers
This is the same calculator as the full tool page, using 2026/27 rates.
Quarterly record book
Tip: amounts are entered as positive numbers - choose Income or Expense above. Everything saves in your browser only.
Your 4 quarterly summaries -
- Income
- Expenses
- Profit
Year income
Year expenses
Year profit
Records
| Date | Q | Description | Type | Amount | |
|---|---|---|---|---|---|
No records yet for . Add your first income or expense above - it stays private in your browser.
Key takeaways
- ✓ Each transaction must be recorded digitally with date, amount and category
- ✓ A spreadsheet is fine if bridging software carries the figures across digitally
- ✓ Retyping totals by hand breaks the digital link and is not compliant
- ✓ Self-employment and property need separate records and separate updates
Check you have got it
3 quick questions. No score is kept, and you can change your mind.
1. Can you keep your records in a spreadsheet under MTD?
2. You are a freelancer who also rents out a flat. How many sets of records do you keep?
3. Does MTD require you to scan every paper receipt?
Sources
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