Digital records clients must keep
A digital record is income or expense created and stored in software that works with MTD for Income Tax. Supporting documents for Self Assessment are still required.
Not tax advice.
What must be recorded digitally
- Self-employment income (sales, takings, fees) and expenses (stock, travel, office, finance costs, etc.).
- Property income (rent, premiums, inducements) and property expenses (repairs, maintenance, services, etc.).
- Each record needs amount, date and category (Self Assessment categories).
One product vs several
- One product that does records + quarterly updates + return: no digital linking needed.
- Multiple products: digitally link record-keeping software to submission software before updates/returns.
- Allowed linking methods include linked spreadsheet cells, file import/export (CSV/XML), API transfer, emailing a spreadsheet for import, portable media.
- Do not cut/paste or re-key records between products after they have been included in a quarterly update.
When records start
- Accounting period ending 5 April → create records from 6 April.
- Accounting period ending 31 March → create records from 1 April and use calendar update periods.
- Mid-year signup: catch up records from the start of the tax year for the first update.
Landlord shortcuts practices should know
- All UK properties are one UK property business (one quarterly update), including the client’s share of jointly let UK property.
- Foreign property: separate digital records per property, but one foreign property business update.
- Joint landlords can use simpler categorisation / income-only quarterly updates (expenses added before the return).
Retention
Keep digital records for at least 5 years after the 31 January submission deadline for the tax year — same as Self Assessment record retention.
Source: https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/create-digital-records
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