What records do you need to keep for Making Tax Digital?

Making Tax Digital is changing how UK businesses manage and report taxes. One of the most important requirements is keeping digital records. But what does that mean in practice, and how do you stay compliant? 

This guide explains the records you need, how to store them, and why getting it right matters.

Why keeping digital records matters 

Making Tax Digital is a government initiative designed to simplify and digitise the UK tax system. It requires businesses and individuals to keep certain records digitally and submit tax information using compatible software. 

For VAT-registered businesses, Making Tax Digital is already mandatory. From April 2026, it will also apply to self-employed individuals and landlords for Income Tax Self Assessment. Keeping accurate digital records helps you: 

• Avoid HMRC penalties for non-compliance.
• Maintain a clear audit trail.
• Save time when preparing VAT returns or income tax submissions. 

What records must be kept under Making Tax Digital? 

Under HMRC rules, you must keep digital records of: 

• Sales and income 

Record the date, value, and nature of each transaction. You don’t need to store invoices digitally, but the details must be logged. 

• Purchases and expenses 

Include the date, amount, and category of each expense. Receipts don’t need to be scanned, but the transaction details do. 

• VAT details (if applicable) 

For VAT-registered businesses, record the VAT rate applied, the amount of VAT charged or paid, and the net value of each transaction. 

• Bank transactions 

Many accounting platforms import bank feeds automatically, making it easier to keep accurate records of money in and out. 

• Adjustments and corrections 

Any changes to your records must be logged digitally with a clear audit trail. 

How should records be stored? 

Records must be kept using Making Tax Digital-compatible software. This means: 

• The software can store and organise digital records.
• It can submit tax returns directly to HMRC.
• It maintains links between records and submissions to ensure data integrity. 

If you’re unsure whether your current system meets HMRC standards, check with your accountant or software provider. 

How long do you need to keep records? 

HMRC requires businesses to keep records for at least six years. They must be accessible and readable if requested during a compliance check.

Common mistakes to avoid 

• Using software that isn’t Making Tax Digital-compatible.
• Failing to link records to submissions.
• Not updating records promptly after adjustments. 

Checklist for compliance 

• Choose Making Tax Digital compatible software.
• Set up bank feeds for accurate transaction tracking.
• Review your record categories for completeness.
• Keep records for at least six years 

If you’re preparing for Making Tax Digital or want to check your current setup, speak to your accountant. They can confirm whether your software and processes meet HMRC requirements.