Record keeping

Making Tax Digital without spreadsheets.

Most advice about MTD assumes you'll either keep a spreadsheet and bolt on bridging software, or move your life into Xero. If you're a landlord or a simple sole trader, there's a shorter route.

Checked against HMRC guidance on 5 October 2026

What MTD actually asks for

Strip away the jargon and Making Tax Digital for Income Tax asks for three things:

Digital records of your income and expenses: the date, the amount and the category of each one.
A quarterly update: the totals for each of HMRC's categories, sent from software that connects to HMRC.
A final declaration after the tax year ends.

Nothing in that list needs a spreadsheet. Nothing needs double-entry bookkeeping, invoices or bank feeds. Those are tools some people find useful, not things HMRC requires.

The three ways people do it

1. Spreadsheet plus bridging software

You keep a spreadsheet, then use bridging software to send the totals to HMRC. It works and it's cheap, but someone still has to type or paste every transaction into the spreadsheet and categorise it by hand, every quarter. The links between the spreadsheet and the bridge also have to stay digital: no retyping totals.

2. Full bookkeeping software

Xero, QuickBooks, FreeAgent and similar. Brilliant if you send invoices, run payroll or have an accountant who lives in them. For a landlord with two flats, it's a lot of software to learn and pay for monthly, to produce four sets of totals a year.

3. Straight from your bank statement

If your rent and costs go through a bank account, your bank statement already is your record of income and expenses. The only missing piece is the category. A tool that reads the statement, sorts each line into HMRC's categories and lets you check them gives you digital records and your quarterly totals in one go.

This is how Quartax works. Download a CSV statement from your online banking and upload it. We sort each transaction into HMRC's categories and flag anything we're unsure about. You check, adjust if needed, and send the update to HMRC. Most people are done in about 10 minutes a quarter.

When the bank statement route works best

Your rental or business money mostly goes through one or two accounts.
You don't send lots of invoices or need to track who owes you what.
You'd rather spend ten minutes a quarter than learn accounting software.

If you pay some costs in cash or from a personal card, that's fine: add them by hand alongside the statement. If you have staff, stock, or dozens of customers paying on account, full bookkeeping software is probably the better fit.

Keeping receipts

MTD doesn't change how long you keep evidence: hold on to receipts and invoices for at least five years after the 31 January filing deadline. A photo in a folder is fine. The digital record HMRC needs is the categorised transaction, not the paper.

Not sure if you're in scope yet? Check in a minute.