MTD Digital Record-Keeping Requirements — What HMRC Actually Demands

Every Making Tax Digital obligation ultimately rests on one foundation: digital records. The quarterly updates are just totals computed from them. Yet "keep digital records" is the requirement people misunderstand most — some assume a photo of a receipt is enough, others fear they must buy enterprise accounting software. Both are wrong.

Here is what HMRC actually requires, where the compliance traps are, and the cheapest workflow that satisfies all of it.

The Core Requirement: Three Facts Per Transaction

For each business transaction you must hold, in a digital form your software can use:

• The date of the transaction;
• The amount;
• The category — which income or expense heading it belongs to.

That is the legal core. You do not have to store scanned receipts inside MTD software (though keeping receipts remains sensible evidence for expenses), and you do not need transaction narratives beyond what categorisation requires. But the three facts must exist digitally, for every transaction, kept up to date through the year — not reconstructed each January.

The Digital Links Rule — Where Everyone Trips

Bank statements and invoices remain original records or supporting documents. The MTD digital record is the income or expense entry you create and store in compatible software. If more than one software product uses those records, the record-keeping product and submission product must be joined by a digital link.

• ✅ Creating the initial record in compatible record-keeping software from a bank statement or invoice;
• ✅ Importing a bank CSV or a reviewed converter export into compatible record-keeping software;
• ✅ Using linked spreadsheet cells, CSV import/export, an API, or another HMRC-permitted method between record-keeping and submission products;
• ❌ Copy-pasting or re-keying an existing digital record between software products after it has been used for a quarterly update.

BankScan AI can prepare structured source data from a statement, but its export is not automatically an MTD digital record or a guarantee of compliance. Import the relevant transactions into compatible record-keeping software, review and categorise them, and use a permitted digital link if another product submits them to HMRC.

Yes, Spreadsheets Are Allowed

HMRC's rules require compatible software, which can be a combination: a spreadsheet holding your records plus recognised bridging software making the submissions, joined by digital links. A possible setup is:

1. Supporting source: your bank statement or bank CSV;
2. Record keeping: reviewed income and expense entries created and stored in compatible software (which may include a spreadsheet setup);
3. Submission: compatible bridging or all-in-one software connected to those records by a permitted digital link.

Paper statements can be scanned and retained as supporting documents; see the source-led statement workflow. You must still create and store the relevant MTD income and expense records in compatible software.

Retention: How Long, and In What Form

Keep your digital records (including the original downloaded statements/CSVs, not just the processed output) for the statutory period — as a rule of thumb at least five years after the 31 January deadline for the year, and six years is a prudent retention habit. Records must remain accessible and legible for the whole period — a dead app with your data locked inside is a compliance failure, which is a good argument for keeping records in durable formats like CSV/XLSX.

A Compliance Self-Test

1. Could you produce date + amount + category, digitally, for every business transaction this quarter?
2. After a digital record was created, was it manually copied or re-keyed between software products instead of moved by a permitted digital link?
3. Are your records updated at least quarterly, not annually?
4. Could you still open your 2026 records in 2032?

Anyone answering wrongly on 1 or 2 should review the setup before the next update. Check HMRC's current guidance or ask a qualified tax professional if you are unsure.

Frequently Asked Questions

Are PDF bank statements digital records under MTD?

No. HMRC treats a bank statement as an original record or supporting document. The MTD digital record is the income or expense record created and stored in compatible record-keeping software. A converter can prepare data for import but does not make the statement or export compliant by itself.

Do I have to keep paper receipts once digitised?

Once a paper document is digitised faithfully and completely, HMRC accepts the digital copy and the paper can be destroyed. Many people keep originals anyway as belt-and-braces, but it is not required if the digital copy is a true representation and stays accessible for the retention period.

Is a photo of a receipt a digital record?

An image alone is not the MTD digital record. It can support the entry, but the amount, date and category must be created and stored as a record in compatible software.

Can I do MTD entirely with Excel?

A spreadsheet can form the record-keeping part of a compatible software setup, but you also need software that can send quarterly updates and submit the annual tax return. If more than one product uses the records, join them using a permitted digital link.

What happens if HMRC finds my records were typed in manually?

Creating an initial digital record from a supporting document is different from moving an existing digital record between products. Once a digital record has been used in a quarterly update, HMRC says you must not manually copy or re-key it within record-keeping software or into another product. Use a permitted digital link for that transfer.

Last updated: 8 July 2026. This guide explains the Making Tax Digital rules as published by HMRC — always check GOV.UK for the latest official guidance. Browse all MTD guides.