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

Text version of this video

1. The short answer

   For Making Tax Digital for Income Tax, you keep digital records of your self-employment and property income and expenses, created and stored in compatible software. And you still keep your usual records, like bank statements and invoices.

2. What each record needs

   Each digital record needs three things: the amount, the date you received the income or had the expense, and a category. The categories are the same ones Self Assessment uses.

3. What to record, and what not

   Record your self-employment income, such as sales and fees, and your expenses. Record your property income, such as rent, and your property expenses, such as repairs. You don't need digital records for other income, like dividends, savings or pensions, but you still report it on your tax return.

4. Spreadsheets and more than one product

   Using a spreadsheet, or more than one product? The records must be digitally linked, for example by importing a file, or linked cells. Once a record has been sent to HMRC in a quarterly update, you must not copy it across by hand, or cut and paste it.

5. When to start, and how long to keep them

   Start from 6 April, or 1 April if your accounting period ends on 31 March. Create the records before you send each quarterly update, and ideally close to the date of each transaction. Keep them for at least 5 years after the tax return deadline of 31 January for that tax year.

6. EasyTaxer is recognised by HMRC for Making Tax Digital for Income Tax. You'll find it at easytaxer.com.