What Digital Records Do You Need for Making Tax Digital?

What a digital record must contain

HMRC requires each transaction to be recorded with three pieces of information:

1. Date — when the income was received or the expense was paid.
2. Amount — the monetary value, in pounds.
3. Category — the type of income or expense (materials, tools, travel, etc.).

These must be recorded in software that is digitally linked to whatever you or your accountant uses to send the quarterly updates to HMRC. That means the data flows from your records to your submission without being manually retyped at any point in the chain.

Income records

If you raise invoices in MTD-compatible software, those invoices are already your income records — the amount, date and category are captured when you create the invoice. You do not need to enter them separately.

Cash jobs must still be entered as income records, even if no invoice was raised. The date the money was received, the amount, and the income category all need to be in your software.

CIS subcontractors should record the gross amount shown on their monthly payment statements — before the contractor deducts tax. The deduction does not go into your quarterly updates. HMRC pre-fills it on your tax return using information from the contractor. See the full CIS walkthrough in Making Tax Digital for CIS subcontractors.

Expense records

Every expense you want to claim needs to be in your digital records with its date, amount and category. The categories HMRC uses for self-employment include:

• ·Materials and stock
• ·Tools and equipment
• ·Van and vehicle costs
• ·Fuel and mileage
• ·Insurance
• ·Phone and broadband
• ·PPE and work clothing
• ·Subcontractor costs
• ·Accommodation (overnight stays)
• ·Professional fees (accountant, etc.)
• ·Advertising and marketing
• ·Bank charges

If your turnover is under £90,000 you can use simplified (cash-basis) categories, which are broader groupings. Most tradespeople on standard plans will use simplified categories.

Timing matters.Records must be in your software no later than the quarterly update they feed into — not all in January. An expense from April to July must be in your records before the 7 August update. HMRC calls this "as the quarter goes along." See self-employed tradesman expenses for the full list of what you can claim.

What doesn't count as a digital record

Mileage records

If you use HMRC's simplified mileage rates (45p per mile for the first 10,000 business miles in the tax year, 25p per mile after that for cars and vans, 24p for motorbikes), each trip needs to be recorded with:

• Date of the journey
• Start and end points (or a description of the purpose)
• Number of miles

Recording every job trip at the end of each day is good practice. Trying to reconstruct a year of journeys from memory in January will lead to underclaiming. See how to track mileage as a self-employed tradesperson for the full method.

How long to keep records

The rule is the same as it has always been for Self Assessment: keep your records for at least five years after the 31 January submission deadline for that tax year. For the 2027–28 tax year (MTD's first year for the £30,000 group), that means keeping records until at least 31 January 2034. HMRC can open an enquiry into any return within that window, so the records need to be accessible, not just stored and forgotten.