Digital Record Keeping: What HMRC Actually Expects

Digital record keeping is the foundation of Making Tax Digital. HMRC doesn't just want your records to exist somewhere on a computer — it has specific rules about what counts as a digital record and how that record must be maintained.

Here's exactly what HMRC expects from sole traders under MTD for Income Tax.

What counts as a digital record

A digital record under MTD is a record of your business income and expenses kept in compatible software. Each entry must capture the key details of a transaction so HMRC can see how your quarterly figures were built up.

• Date of the transaction
• Amount (income or expense)
• Category or type of transaction
• A brief description or reference

The 'digital link' rule

One of MTD's core requirements is that there must be a digital link between each part of your record-keeping process. In practice, this means you shouldn't be manually re-typing figures from one system to another.

For example, if you use a receipt-scanning app and separate accounting software, the two need to transfer data digitally — not by you copying numbers across. Using an all-in-one tool like AppyTax sidesteps this entirely, because recording, categorising, and submission all happen in one connected system.

What doesn't count as digital

Some common record-keeping methods don't meet MTD requirements on their own:

• A paper ledger or notebook, even if you later type it up.
• A spreadsheet with no connection to your submission software, where figures are copied in by hand.
• Photos of receipts stored on your phone with no link to your accounting records.
• Emails containing invoice details, unless they're pulled into your software digitally.

How long to keep records

You must keep your digital records for at least five years after the 31 January deadline of the relevant tax year. So for the 2026/27 tax year, records must be retained until 31 January 2033.

AppyTax keeps your records securely stored for the full retention period, so you don't have to worry about accidentally deleting something HMRC might ask for.

Receipts and supporting evidence

You don't have to keep every receipt digitally, but you must be able to support the figures in your records. The simplest approach is to attach or photograph receipts inside your software as you log the expense — then the evidence lives alongside the record and is always ready if HMRC asks.

Make record-keeping effortless

The easiest way to meet every HMRC requirement is to use software built for it. AppyTax handles digital links, categorisation, retention, and receipt storage for you — subscribe and your records will be MTD-compliant from day one.