Keeping records for MTD for VAT and MTD for Income Tax at the same time

acrenvo.com/guides/mtd-vat-and-income-tax-records, last reviewed 31 October 2026

Dev is fictional, but his routine will sound familiar to many sole traders. He is a self-employed joiner, registered for VAT, and once a week he sits down with his receipts and invoices and enters them into his software. Now that Making Tax Digital (MTD) for Income Tax applies to him as well, he wants to keep doing that once, not twice, and he is not sure whether the records he keeps for VAT will also do for Income Tax. This guide sets GOV.UK’s VAT record rules beside the Income Tax ones, so you can see where they overlap and where they differ.

What MTD for VAT asks you to keep digitally

MTD for VAT asks for a defined set of records to be kept digitally, rather than every record. You must keep some VAT records digitally (also known as an ‘electronic account’) unless you’re exempt from following ‘Making Tax Digital for VAT’ rules. Keep digital records of the following:

• the VAT on goods and services you supply (supplies made)
• the VAT on goods and services you receive (supplies received)
• the ‘time of supply’ and ‘value of supply’ (value excluding VAT) for everything you buy and sell
• any adjustments you make to a return
• reverse charge transactions
• any VAT accounting schemes you use
• your total daily gross takings if you use a retail scheme
• items you can reclaim VAT on if you use the Flat Rate Scheme
• your total sales, and the VAT on those sales, if you trade in gold and use the Gold Accounting Scheme

GOV.UK’s VAT Notice adds a short list of business details to the same digital set. You must have a digital record of:

• your business name
• the address of your principal place of business
• your VAT registration number
• any VAT accounting schemes that you use

Everything else can stay as it is. You’ll need to keep additional records, such as invoices. You do not have to keep these digitally but you may choose to do so.

What MTD for Income Tax asks you to keep

The Income Tax rules are framed around income and expenses rather than around tax charged. You need to create and store digital records of your self-employment and property income and expenses, such as:

• self-employment income, including sales, takings and fees
• self-employment expenses, including the cost of stock, travel costs, office costs and financial costs
• property income, including rent, premiums for the grant of a lease, reverse premiums and inducements
• property expenses, including rent, costs of repairs, maintenance or other services

When you create records of your income or expenses, you will need to record the:

• amount
• date when the income was received or expenses incurred
• category (the type of category you use depends on the type of business you have)

Making Tax Digital for Income Tax uses the same categories of income and expenses as Self Assessment. The guide to MTD digital records covers the Income Tax rules in full.

Where the two sets of records overlap

For Dev, the overlap is the useful part. Each sale and each purchase is a transaction that both sets of rules care about: Income Tax needs its amount, date and category, while VAT needs the VAT on it and, in GOV.UK’s words, the ‘time of supply’ and ‘value of supply’ (value excluding VAT) for everything you buy and sell. If the same software holds both sets of details, each transaction only needs entering once, and for Dev that is the main reason to look for one product. The guide to using one product for both lists which of the products we compare say they handle both.

VAT also asks for a running summary that Income Tax does not. GOV.UK calls it your VAT account, and says that there are not any rules on what a VAT account should look like, but it must show:

• your total VAT sales
• your total VAT purchases
• the VAT you owe HMRC
• the VAT you can reclaim from HMRC
• if your business uses the VAT Flat Rate Scheme, the flat rate percentage and turnover it applies to

Spreadsheets and digital links

Both sets of rules let you keep records in a spreadsheet, as long as the spreadsheet is joined up to the software that sends your figures to HMRC. For VAT, GOV.UK says to use a compatible software package or other software (like spreadsheets) that connect to HM Revenue and Customs (HMRC) systems. The complete set of digital records to meet Making Tax Digital requirements does not have to be held in one place or in a single piece of software.

The joins between those pieces need the most care. If you use more than one software package or product to keep records and submit returns, you need to link them. This must be a digital link. You cannot manually transfer this data, or ‘copy and paste’, between software. Some ways you can link your software include:

• using formulas to link cells in spreadsheets
• emailing records
• putting records on a portable device to give to your agent
• importing and exporting XML and CSV files
• downloading and uploading files

The guide to digital links and bridging software for VAT sets out what else HMRC counts as a link, and when no link is needed.

MTD for Income Tax takes a similar line. A digital record is a record of your income or expense that is created and stored using software that works with Making Tax Digital for Income Tax. The guide to spreadsheets and bridging software explains how that route works for Income Tax.

How long to keep each set

The two retention periods are measured differently, so it is worth keeping records for whichever runs longer. For VAT, begin keeping records when you register for VAT. You must keep VAT records for at least 6 years (or 10 years if you are using the VAT One Stop Shop (OSS) scheme or used the VAT Mini One Stop Shop (MOSS) scheme). For Income Tax, you will need to keep your digital records for at least 5 years after the 31 January submission deadline for a tax year. This is the same amount of time you need to keep records for Self Assessment.

If you stop being registered for VAT, the digital requirement ends but the records do not. If you deregister from VAT, you no longer need to keep digital records in functional compatible software. However, you must still retain your VAT records for the required period.

For how VAT and Income Tax fit together more generally, the guide to MTD for VAT and MTD for Income Tax is the place to start.

Questions about records for VAT and Income Tax