Digital Record Keeping for Property: MTD Requirements

· 3 min read

Digital Record Keeping for Property: MTD Requirements

Last updated: April 2026

Making Tax Digital (MTD) doesn’t just require quarterly reporting – it mandates digital record-keeping from the start. Understanding what records you need to maintain digitally, and how to maintain them, is essential for compliance.

What is Digital Record-Keeping?

Digital record-keeping means storing your business records in a digital format that can be read by MTD-compatible software. This isn’t simply scanning paper receipts – it’s maintaining a complete digital audit trail of all your property income and expenses.

The Core Requirement

Under MTD, you must:

  • Keep digital records of all your income and expenses
  • Use software that can communicate with HMRC’s API
  • Maintain records in a functional digital format (not PDFs or images)
  • Preserve records for at least 6 years

What Records You Must Keep Digitally

For Each Property Transaction

Record TypeInformation Required
Transaction dateWhen income received or expense paid
AmountValue of transaction
CategoryType of income or expense
Associated propertyWhich property the transaction relates to
CounterpartyTenant, agent, or supplier name

Supporting Documentation

  • Platform statements (Airbnb, Booking.com, etc.)
  • Bank statements
  • Invoices and receipts
  • Tenancy agreements
  • Inventory reports
  • Agent statements and invoices

Accounting Software Features

Your MTD-compatible software should allow you to:

  1. Record transactions - Enter income and expenses in real-time
  2. Categorise spending - Assign expense categories automatically or manually
  3. Attach receipts - Link digital copies of supporting documents
  4. Generate reports - Produce profit/loss statements for each period
  5. Submit updates - Send quarterly reports to HMRC directly
  • Dedicated property platforms - Built specifically for rental accounting
  • Cloud accounting - Generic tools like Xero, FreeAgent, or QuickBooks
  • Spreadsheet solutions - For simple portfolios (with limitations)

What NOT to Use

Avoid systems that don’t integrate with HMRC’s API:

  • Basic spreadsheets without add-ons
  • Manual ledgers
  • PDF-only storage
  • Paper record-keeping

Organising Your Records

Property-by-Property Tracking

For each property you rent, track:

  • Full address and letting type
  • Rental terms and rates
  • Tenants or guests
  • Bookings and occupancy
  • Income received
  • Expenses incurred

Month-End Reconciliation

At minimum, reconcile your records monthly:

  • Compare platform statements to your entries
  • Check bank statements match your records
  • Verify expense receipts are attached
  • Review profit/loss for the period

Best Practices for Landlords

Regular Updates

  • Weekly: Record income from weekly bookings
  • Monthly: Reconcile bank statements and review expenses
  • Quarterly: Prepare and submit MTD updates
  • Annually: Complete Self Assessment with full records

Receipt Management

Keep digital copies of:

  • All agent invoices
  • Utility bills (if you pay)
  • Cleaning and maintenance invoices
  • Insurance documents
  • Professional fees
  • Any repair invoices

Audit Trail Requirements

Your records must show:

  • Original source of each transaction
  • How you categorised each item
  • Any amendments made (with reasons)
  • Supporting evidence for deductions

Common Digital Record Mistakes

  1. Using non-compatible software - Always verify MTD compliance
  2. Deleting “duplicate” records - Keep all supporting documentation
  3. Poor receipt attachment - Link receipts to transactions promptly
  4. Inconsistent categorisation - Use consistent categories
  5. Not backing up - Maintain secure backups

Try HMRC Reporter: https://hmrcreporter.com

📊 Free: MTD Readiness Checklist for Property Managers

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