MTD Digital Records for Landlords: Requirements Explained
What digital records you need to keep for Making Tax Digital compliance. Income, expenses, digital links, and how MTD-compatible software like Latch helps.
The Latch Team
Editorial
Making Tax Digital requires landlords to keep digital records of all rental income and allowable expenses. Paper ledgers, handwritten notebooks, and basic spreadsheets no longer meet HMRC's requirements.
The digital records requirement is not just about having computer files. HMRC mandates specific record-keeping standards, digital links between your records and submissions, and retention of supporting documents like receipts and invoices.
This guide explains exactly what digital records you need to keep as a landlord, how long you must retain them, what digital links means in practice, and how MTD-compatible software like Latch ensures full compliance.
What Are Digital Records Under MTD?
Digital records means keeping your business income and expense information in a digital format within MTD-compatible software. The records must meet specific HMRC requirements:
- Stored digitally: Records must be kept in electronic form, not on paper
- Contemporaneous: Records should be created at or near the time of each transaction
- Complete: All required information must be recorded for each transaction
- Preserved: Records must be kept for at least 5 years after the 31 January submission deadline
- Digitally linked: Data must flow electronically from records to submissions without manual re-typing
Spreadsheets Are Not Enough: Basic Excel or Google Sheets spreadsheets do not meet MTD requirements unless you use bridging software to connect them to HMRC's systems. Most landlords find dedicated MTD-compatible software simpler.
Income Records You Must Keep
You must keep digital records of all income from your rental properties. This includes not just rent, but any other property-related income.
Rental Income
For each rent payment received, you must record:
| Field | Description | Example |
|---|---|---|
| Date | When you received the payment | 15 June 2026 |
| Amount | Full amount in pounds and pence | £1,250.00 |
| Payer | Who paid (tenant name) | John Smith |
| Property | Which property the payment relates to | 123 High Street, London |
| Description | What the payment covers | Rent for June 2026 |
| Category | Type of income for tax purposes | Rental income |
Other Property Income
Also record:
- Service charges: Payments from tenants for services, utilities, or communal costs
- Ground rents: If you lease the land and receive ground rent
- Rental deposit interest: Interest earned on deposits held in protected schemes
- Insurance claims: Payments from insurers for property damage
- Sundry income: Laundry fees, parking fees, or other miscellaneous income from the property
Not Income: Tenant deposits are not rental income when received. They are liabilities. Only record them as income if you retain part or all of the deposit for damages or unpaid rent.
Expense Records You Must Keep
You must keep digital records of all allowable expenses related to your rental properties. For each expense, record:
| Field | Description | Example |
|---|---|---|
| Date | When you paid the expense | 22 June 2026 |
| Amount | Full amount in pounds and pence | £450.00 |
| Payee | Who you paid | ABC Plumbing Ltd |
| Property | Which property the expense relates to | 123 High Street, London |
| Description | What you purchased or paid for | Boiler repair - replaced thermostat |
| Category | Type of expense for tax purposes | Repairs and maintenance |
| Receipt | Link to digital copy of receipt or invoice | Invoice #12345.pdf |
Common Landlord Expense Categories
HMRC requires expenses to be categorised. Common categories for landlords include:
Repairs and Maintenance
Plumbing repairs, decorating, appliance servicing, gardening, cleaning between tenancies
Legal and Professional
Solicitor fees, accountant fees, letting agent fees, property management fees
Insurance
Buildings insurance, contents insurance, landlord liability insurance
Finance Costs
Mortgage interest, loan interest, bank charges, credit card fees for business accounts
Utilities
Gas, electricity, water, council tax (only if you pay these costs, not your tenant)
Safety and Compliance
Gas safety certificates, electrical certificates, EPC assessments, fire alarm testing
Travel
Mileage to properties for inspections, meetings with tenants, supervising repairs
Other Expenses
Advertising for tenants, stationery, software subscriptions, telephone costs
Digital Links Requirement
A critical MTD requirement is that data must flow digitally from your records to your quarterly submissions. You cannot manually re-type figures from a spreadsheet or notebook into your submission.
HMRC defines a digital link as:
A transfer or exchange of data between software programs, products or applications which does not require any manual intervention.
What Breaks a Digital Link
These actions break the digital link and do not comply with MTD:
- Typing figures from a spreadsheet into MTD software
- Copying and pasting figures from one spreadsheet to another
- Writing figures from a bank statement into software by hand
- Calculating totals on paper and entering them into software
- Using emails or text messages as source records and manually entering them
What Maintains a Digital Link
These methods maintain digital links:
- Bank feeds: Automatic import of bank transactions into MTD software
- API integrations: Software-to-software connections that transfer data automatically
- CSV/XML imports: Importing transaction files directly from your bank or other software
- Receipt scanning apps: Taking photos of receipts that are automatically imported into MTD software
- Direct entry in MTD software: Typing transactions directly into your MTD-compatible software
Latch Bank Feeds: Latch connects to your bank via Open Banking and automatically imports transactions every day. This maintains the digital link HMRC requires and eliminates manual data entry.
Receipt Storage Requirements
Digital records of transactions alone are not sufficient. You must also keep supporting documents like receipts, invoices, and bank statements to prove your income and expenses.
What Receipts to Keep
Keep receipts or invoices for:
- All expenses over £25 (HMRC may query expenses without receipts)
- Significant expenses regardless of amount (repairs, insurance, professional fees)
- Capital expenditure (property purchase, major improvements)
- Expenses that might be questioned (gifts, entertaining, mixed-use costs)
For smaller routine expenses (petrol, parking, minor supplies), a bank statement showing the transaction may be sufficient evidence.
Digital Receipt Storage
HMRC accepts digital copies of receipts. You do not need to keep paper originals if you have clear, legible digital scans or photos. Digital copies must:
- Be a true copy of the original document
- Be legible and show all relevant information (date, amount, payee, description)
- Be stored securely where they cannot be lost or tampered with
- Be retained for at least 5 years from the 31 January submission deadline
Latch Receipt Scanner: Photograph receipts with your phone and Latch automatically extracts the date, amount, and payee, creating an expense record linked to the digital receipt image.
Bank Feed Integration vs Manual Entry
Most MTD-compatible software offers two methods for recording transactions: bank feed integration or manual entry.
Bank Feed Integration (Recommended)
Connect your business bank account to your MTD software via Open Banking. Transactions are automatically imported each day.
Advantages:
- Eliminates manual data entry and associated errors
- Maintains digital links required by MTD
- Ensures no transactions are forgotten or missed
- Saves significant time (hours per month for active landlords)
- Provides automatic bank reconciliation
Disadvantages:
- Requires initial setup and bank authentication
- You must still categorise transactions (though software can learn and auto-categorise)
- Mixed personal/business accounts require careful filtering
Manual Entry
Type each transaction directly into your MTD software.
Advantages:
- No bank connection required
- More control over what is recorded
- Useful for cash transactions or mixed-use accounts
Disadvantages:
- Time-consuming and tedious
- Risk of errors, duplicates, or omissions
- Still requires digital source (cannot type from paper records)
- No automatic bank reconciliation
Best Practice: Use bank feeds for your primary rental account and manual entry only for cash transactions or mixed-use accounts. This maximises automation while maintaining full MTD compliance.
How Long to Keep Records
HMRC requires you to keep all digital records and supporting documents for at least 5 years after the 31 January submission deadline for the relevant tax year.
For example:
- Tax year 2026/27 (ending 5 April 2027)
- Final declaration deadline: 31 January 2028
- Earliest you can destroy records: 31 January 2033 (5 years later)
This retention period applies to:
- Digital records of all transactions
- Digital copies of receipts and invoices
- Bank statements
- Quarterly submission records and HMRC acknowledgments
- Final declaration records and supporting calculations
Keep for Longer in Some Cases: If HMRC opens an enquiry into your tax affairs, you must keep records until the enquiry is closed. If you submitted a late return, the 5-year period starts from when you actually submitted, not the original deadline.
Property-Level Record Keeping
If you own multiple properties, you should track income and expenses at the property level, not just in aggregate. This is not strictly required by HMRC for MTD, but it provides significant benefits:
Identify Profitable Properties
See which properties generate profit and which are loss-making after all expenses.
Support Tax Deductions
Property-level records make it easier to prove expenses if HMRC queries them.
Track Maintenance History
Know when major repairs or improvements were done, useful for capital gains calculations.
Portfolio Management
Make informed decisions about which properties to keep, improve, or sell.
MTD-compatible software like Latch allows you to allocate each transaction to a specific property, automatically generating property-level profit and loss reports.
Shared Cost Allocation
Some expenses benefit multiple properties or are partly personal. HMRC requires you to allocate shared costs proportionately.
Common Shared Costs
- Accountancy fees: Allocate based on the portion related to rental income vs other income sources
- Vehicle expenses: Keep a mileage log and claim only business miles
- Home office costs: Calculate the percentage of your home used exclusively for rental business and claim that portion of utilities, mortgage interest, council tax
- Insurance: If one policy covers multiple properties, allocate premium proportionately
- Software subscriptions: If you use software for both rental and personal purposes, claim only the business portion
MTD software should allow you to split transactions across multiple properties or allocate a percentage as business use.
How Latch Simplifies Digital Record Keeping
Latch automates digital record keeping to meet all MTD requirements without manual effort.
Automatic Bank Imports
Connect your bank and transactions are imported daily with digital links maintained.
AI Categorisation
Smart categorisation learns from your corrections and auto-assigns categories to new transactions.
Receipt Scanner
Photograph receipts on your phone and Latch stores them linked to the expense record.
Property-Level Tracking
Allocate each transaction to specific properties for detailed profit and loss reports.
Shared Cost Allocation
Split expenses across multiple properties with customisable allocation rules.
5-Year Record Retention
All records are stored securely in the cloud with automatic backups and guaranteed availability.
Keep Perfect Digital Records with Latch
Try Latch free for 30 days. Automatic bank feeds, receipt scanning, and complete MTD compliance.
Ready to simplify your property management?
Create your free account today and see how organized financial tracking can streamline your portfolio.
Get Started with LatchCommon Record-Keeping Mistakes
Avoid these common errors that can result in HMRC queries, penalties, or disallowed expenses:
- Recording income on accruals basis: MTD uses cash basis. Record income when received, not when invoiced or due.
- Missing small transactions: Every transaction matters. Do not ignore small expenses because they seem insignificant.
- Recording gross when you should record net: If an agent deducts their fees before paying you rent, record the net amount as income and the fees as an expense.
- Combining personal and business records: Keep business records separate. Mixed accounts create categorisation nightmares.
- Not recording non-cash transactions: Barter, gifts, or services received in lieu of payment must be recorded at market value.
- Deleting or overwriting records: Never delete original records, even if you made an error. Create adjustments instead.
- Forgetting to record mileage: Keep a mileage log for travel to properties. This is often a significant allowable expense.
- Recording capital improvements as repairs: Repairs are immediately deductible. Improvements are capital and not deducted from rental income.
Checklist: MTD Digital Records Compliance
- All income transactions recorded with date, amount, payer, property, and category
- All expense transactions recorded with date, amount, payee, property, and category
- Digital receipts stored for all expenses over £25 and significant expenses
- Bank feeds connected to maintain digital links
- Transactions categorised correctly into HMRC's required expense types
- Shared costs allocated proportionately across properties or personal/business use
- Records stored securely with backups in case of computer failure
- Retention policy in place to keep records for 5 years after 31 January deadline
Frequently Asked Questions
Can I keep paper records as well as digital?
Yes, but your primary records must be digital. You can keep paper originals for peace of mind, but HMRC will expect you to submit data from digital records.
What if I lose digital records due to computer failure?
You remain responsible for keeping records. Use cloud-based MTD software (like Latch) with automatic backups to eliminate this risk. Local spreadsheets or desktop software should be backed up regularly.
Do I need to record every single transaction?
Yes. MTD requires contemporaneous digital records of all income and expenses. You cannot estimate or use annual summaries.
Can I use separate software for record-keeping and submissions?
Yes, provided the data flows digitally between them (via API, file import, or similar). However, most landlords find it simpler to use a single MTD-compatible platform like Latch that handles both.
Disclaimer: This guide provides general information about MTD digital records requirements. It does not constitute tax advice. Consult a qualified accountant for advice specific to your circumstances.
