How to Keep Digital Records for MTD: A Freelancer's Practical Guide
By Invoa Team
When HMRC talks about “keeping digital records” under Making Tax Digital for Income Tax, most freelancers assume it means saving their invoices as PDFs. It does not. The requirement is more specific — and more significant — than that. If you are not set up correctly before the April 2026 deadline, you may find yourself scrambling to change your entire record-keeping system under pressure.
This guide explains exactly what HMRC means by a digital record, what does and does not qualify, and how to set up a simple, compliant system that will serve you well for years.
What HMRC means by “digital records”
Under MTD, a digital record is not just a file saved on a computer. It is structured data — held in software that is capable of extracting and submitting that data to HMRC. The distinction matters because HMRC needs to be able to receive and process your income and expense figures through its API, not read a PDF.
For each income transaction, HMRC requires that your digital records capture:
For expenses, each purchase must be recorded individually with the same fields: date, amount, and category. Grouping all your expenses into a monthly total does not meet the requirement.
What does NOT count as a digital record under MTD
This is where many freelancers get caught out. The following are common record-keeping approaches that will not satisfy MTD requirements on their own:
A scan or photo of a paper invoice saved to Dropbox
The image itself is not the record. The data must be in software that can process it — not stored as a flat image file.
A Word document or Excel spreadsheet you fill in manually
Unless the spreadsheet is connected to HMRC via approved bridging software, it does not count as a digital record under MTD.
A paper bank statement
Bank transactions are not the same as income records. HMRC requires you to record each invoice individually, not reconstruct income from bank credits.
A PDF of your end-of-year accounts
Annual accounts are a summary. MTD requires transactional records kept throughout the year — not a year-end reconciliation.
Emails with invoice attachments sitting in your inbox
Your email inbox is not a record-keeping system. Invoices need to be captured in software that can categorise and submit the data.
What software qualifies?
To qualify under MTD, software must be recognised by HMRC as MTD-compatible. This means it can connect to HMRC's API and either submit data directly or work with bridging software that does. HMRC publishes a list of approved software on their website — it is updated regularly as new products are certified.
The practical options for most freelancers fall into three categories:
Dedicated invoicing platforms
Income recordsTools like Invoa that record every invoice you raise — client, date, amount, payment status — as structured digital data. This covers the income side of your MTD records automatically.
Bookkeeping or accounting software
Full MTD submissionsPlatforms that handle both income and expenses, and can submit quarterly updates and the final declaration directly to HMRC. Some also integrate with your invoicing software.
Spreadsheets with bridging software
Advanced workaroundIf you are committed to using a spreadsheet, bridging software acts as an intermediary between your spreadsheet and HMRC. This approach is more fragile and requires careful maintenance.
What records do you need to keep for income?
For each piece of self-employment income, your digital records must show:
- Who you invoiced — the client name and ideally their address
- When you invoiced them — the invoice date
- How much you invoiced — the gross amount
- What the invoice was for — a brief description of the services
- When you were paid — the payment date determines which tax quarter the income falls in
- Any credits, adjustments, or cancelled invoices
Invoa stores all of this automatically
Every invoice you raise in Invoa captures the client, date, amount, line items, and payment status. Your income records for MTD are built as you work — there is nothing extra to set up.
What records do you need to keep for expenses?
Allowable business expenses must also be kept digitally under MTD. Common categories for freelancers include:
Each expense item needs: the date of purchase, the amount, the supplier or payee, and the category it falls into. You will need an expense-tracking tool alongside your invoicing software — most bookkeeping platforms handle this.
A simple system that works
You do not need an expensive or complex setup to be MTD-compliant. The following two-part approach works well for most freelancers:
Invoice income
Use Invoa to raise and track all client invoices. Every invoice is automatically a compliant digital record. You can see all your income in one place, track what has been paid, and pull a clear picture of your quarterly earnings.
Expense tracking
Use a dedicated bookkeeping app or an accountant-managed platform to record expenses as they occur. Log each purchase at the time — not in a batch at the end of the quarter. Many platforms let you photograph receipts and auto-categorise spending.
Quarterly review
Set a recurring reminder for a few days before each submission deadline (5 August, 5 November, 5 February, 5 May). Review your income and expenses for the quarter, confirm everything is recorded, and submit your quarterly update.
Retain records
HMRC requires you to keep digital records for at least 5 years after the submission deadline for the relevant tax year. Make sure your software retains data for this period — or export and archive it annually.
Getting ahead of the deadline
April 2026 sounds like a long way off, but the freelancers who will find MTD easiest are the ones who start keeping proper digital records now — not in January 2026. The reason is simple: if you start today, you will have months of well-organised records to draw on when you submit your first quarterly update. If you wait, you may need to reconstruct months of income and expenses from scratch.
Every invoice you raise in Invoa is already a compliant digital record for MTD purposes. There is no additional setup, no data entry, and no risk of losing records if your laptop breaks. Start free today — and you will be ahead of the curve before the deadline arrives.
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