Notice

Making Tax Digital for Income Tax: digital record-keeping direction

Updated 27 March 2026

This direction is made further to regulation 15 of The Income Tax (Digital Obligations) Regulations 2026.

In this direction:

• “relevant person” has the meaning given in paragraph 1(1) of Schedule A1 to the Taxes Management Act 1970.
• “relevant activity” has the meaning given in paragraph 1(2) of Schedule A1 to the Taxes Management Act 1970.
• “digital record” and the digital record‑keeping obligation are set out in regulation 15 of the Income Tax (Digital Obligations) Regulations 2026.

1. A relevant person with property income and profits from a jointly let property which are chargeable to income tax under Part 3 of ITTOIA 2005 (property income)

Relevant persons with jointly let property can independently make use of either easement set out below.

A person who chooses to report only income, not expenses, is considered an ‘eligible person’ for the purposes of this direction.

An eligible person:

• in relation only to their share of income that arises from properties they let jointly, can create one digital record (a single entry) for each category of property income that was received during a quarterly update period. The reference to category of property income is a reference to the categories set out in sections 3.1 and 3.2 of the Making Tax Digital for Income Tax quarterly update direction.

• in relation only to their share of expenses that arise from properties they let jointly can create one digital record (a single entry) for each category of property expense that was incurred during a tax year. The reference to category of property expense is a reference to the categories set out in section 2.1 and 2.2 of the Making Tax Digital for Income Tax quarterly update direction.

Section 1 of this direction does not apply to a joint property owner who decides not to create digital records as set out above.

2. Turnover below the VAT registration threshold

A relevant person with an annual turnover from either self-employment or UK property that is below the VAT registration threshold, may choose to categorise their digital records of income and expenses in less detail.

For each relevant source of income, they can categorise digital records as either income or an expense, instead of using the more detailed categories listed in the Making Tax Digital for Income Tax quarterly update direction. This will mean they send figures for total income and total expenses, for each relevant income source, in their quarterly update information.

However, such a person must, if they receive property income and incur residential property finance costs (such as mortgage interest), create a separate digital record for these costs and send them separately from other expenses, in their quarterly update information.

More information is available about the restriction on finance cost relief for individual landlords.

A relevant person that lets property jointly and is trading below the VAT registration threshold can also choose to categorise their records as set out in Section 2 of this direction.

3. Retail sales

This section applies to retail sales of the relevant activity of a retailer.

A relevant person may choose, in respect of each tax year, that the digital records in relation to retail sales of that relevant activity comprise a single digital record of the daily gross takings for any retail sales made.

The gross daily retail sales digital record must include:

• all payments as they are received by the relevant person or on the relevant person’s behalf, from its own cash-paying retail consumers — this includes payments by cheque, debit or credit card, maestro, visa or similar electronic transactions and electronic cash

• the full value of all credit or other non-cash retail sales received by the relevant person or on the relevant person’s behalf — this includes the full value of credit sales, the cash value of payment in kind for retail sales, the face value of gift, book and record vouchers received and any other payments for retail sales, including those sales completed via third-party online sales platforms

The following should be excluded when calculating the amount of daily gross takings:

• counterfeit notes
• illegible credit card transactions
• inadvertent acceptance of foreign currency (where discovered after their acceptance)
• inadvertent acceptance of out-of-date coupons which are not honoured by promoters
• instalments in respect of credit sales
• refunds to a consumer for overcharges or faulty or unsuitable goods
• float discrepancies
• unsigned or dishonoured cheques from cash customers
• use of training tills
• void transactions
• any other income that is not included in the gross daily retail sales digital record

Guidance is available on keeping digital records and submitting quarterly updates as part of Making Tax Digital for Income Tax.