Making Tax Digital: Records Sole Traders and Landlords Need
Making Tax Digital: Records Sole Traders and Landlords Must Keep
If you're a sole trader or landlord earning £30,000 or more, Making Tax Digital (MTD) affects how you handle your tax records. Self-employed individuals and landlords above this threshold must use digital record-keeping and submit quarterly updates to HMRC using compatible software. Understanding which records to keep—and how—is essential to staying compliant and avoiding penalties.
Understanding the £30,000 Threshold
Making Tax Digital applies if your business or rental income exceeds £30,000 a year. The threshold applies to your turnover, not your profit, so even if you make less than £30,000 in profit, you still need to comply if your income is above it. This includes sole traders running a business and landlords with rental properties.
Essential Records to Keep Digitally
MTD requires you to maintain digital records of your income and expenses. Here's what you must keep:
- Income records: All invoices, receipts for payment, and records of sales or rental income. This includes bank statements showing money received.
- Expense records: Receipts and invoices for all business or rental property expenses—repairs, supplies, utilities, professional fees, and marketing.
- Bank statements: Digital copies of all business bank statements showing deposits and withdrawals.
- Mileage logs (if applicable): Records of business-related travel, including dates, distances, and purposes.
- VAT records (if registered): Invoices showing VAT charged and paid, if you're VAT-registered.
These records don't need to exist as physical documents anymore. Digital copies are sufficient, provided they're clear and complete enough for HMRC to verify.
How to Organize Your Records
Keeping records organized isn't just about compliance—it makes your tax life easier. Create a system that works for your business:
- Use a folder structure: Create separate folders for income, expenses, and bank statements. Sub-divide by month or quarter.
- Name files clearly: Use a consistent naming convention like "Invoice_2026-10-01_ClientName.pdf" so records are easy to find.
- Keep backup copies: Store records in at least two places—your computer and cloud storage—to protect against data loss.
- Retain PDFs when possible: Digital invoices and receipts in PDF form are easier to organize than image scans.
Records to Keep Beyond MTD Basics
While MTD requires digital income and expense records, HMRC also expects you to retain supporting documentation. Keep:
- Purchase invoices and receipts (6 years)
- Sales invoices and receipts (6 years)
- Bank statements and building society statements (6 years)
- Business diary or records of business dealings
- Records of stocks (for businesses holding inventory)
The 6-year retention period is standard for UK tax records.
Landlord-Specific Records
If you're a landlord, keep records specific to your rental business:
- Tenancy agreements
- Proof of rent received
- Invoices for repairs and maintenance
- Property insurance receipts
- Mortgage statements and interest paid
- Council tax and business rates (if applicable)
- Utility bills and other running costs
Common Record-Keeping Mistakes
Many sole traders and landlords trip up on simple mistakes. Avoid these:
- Mixing personal and business expenses without clear documentation
- Keeping only paper receipts instead of digital copies
- Relying on memory to categorize expenses months later
- Not backing up digital records
Getting Support with Your Records
If organizing your tax records feels overwhelming, help is available. Our Making Tax Digital guide for the £30,000 threshold walks you through exactly which records you need to keep and how to organize them in a way that passes HMRC scrutiny. It's designed specifically for sole traders and landlords facing MTD requirements for the first time.
Get Started Today
MTD compliance doesn't need to be complicated. Start by gathering all your records from the past year and organizing them using the system outlined above. If you need structured guidance, explore our MTD record-keeping resource to ensure you're compliant and ready for your next tax submission.
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