Under £90,000? You can keep simpler records
Most of the dread about Making Tax Digital is about categorising every receipt. Below £90,000, you largely do not have to.
HMRC’s wording: with turnover under £90,000, you “only need to record whether a transaction is income or an expense.” No categories, no splitting things between “materials” and “motor expenses”. Just in or out.
It is per income source, not your total
This is where nearly every summary blurs it. The £90,000 is tested against each income source separately, not against your combined qualifying income.
So someone with a £70,000 trade and £70,000 of rents can use simplified records for both — even though their qualifying income is £140,000 and they were mandated years ago. HMRC’s wording is “total UK property turnover of less than £90,000” and “turnover from a source of self-employment that is less than £90,000” — two separate tests.
The trap: crossing £90,000 mid-year is retrospective
If turnover reaches £90,000 during the tax year, you must “categorise all digital records for that income source in full” — including the ones from the start of the tax year. Not from the day you crossed. All of it.
Picture a builder who starts the year on track for £75,000, records everything as plain income and expense for eight months, then wins a big job in January that pushes him over. He now has to go back through eight months of records and categorise every one.
If you are anywhere near £90,000 and growing, categorise from day one anyway. The easement is only a saving if you are confidently below the line for the whole year.
What a digital record needs either way
- The amount
- The date the income was received or the expense incurred
- The category — and below £90,000, “income or expense” is the category
Note this is about the detail you keep, not the medium. Records still have to be digital, and you still submit through recognised software. If you would rather keep using a spreadsheet, bridging software is the smaller change.
It does not change your deadlines
Simplified records make each quarter less work; they do not move a single date. Updates are still due 7 August, 7 November, 7 February and 7 May, then the tax return by 31 January. See every date.
Common questions
Do I have to categorise every transaction under Making Tax Digital?
Not if the income source turns over less than £90,000. HMRC says you "only need to record whether a transaction is income or an expense" — no category needed. Above £90,000 you must categorise in full.
Is the £90,000 based on my total qualifying income?
No — and this is the part most summaries get wrong. It is tested per income source. HMRC's wording is "total UK property turnover of less than £90,000" or "turnover from a source of self-employment that is less than £90,000". Someone with £70,000 of self-employment and £70,000 of rents is under it on both, despite £140,000 of qualifying income.
What happens if I go over £90,000 during the year?
You have to go back and categorise that income source's records in full, from the start of the tax year — not from the day you crossed. HMRC's wording is that you must "categorise all digital records for that income source in full", including those from the beginning of the current tax year.
What does a digital record have to contain?
Whatever the threshold, each record needs the amount, the date the income was received or the expense incurred, and the category. Below £90,000, the category is simply whether it is income or expense.
Does this change my deadlines?
No. It changes how much detail you keep, not when you file. The updates are still due 7 August, 7 November, 7 February and 7 May, then your tax return by 31 January.
Source: Use Making Tax Digital for Income Tax — Keep digital records. Check whether you are in scope at all — plenty of people worrying about record keeping are not in yet.
Tax Threshold gives information, not tax advice. If you are close to £90,000 on any source, talk to an accountant before deciding how to keep records — the retrospective rule makes guessing expensive.