MTD for Retailers: How to Keep Digital Records of Daily Takings
Last updated: February 2026
Retail businesses have always recorded their takings differently from other trades. When you sell hundreds of items a day over the counter, you do not issue an invoice for every transaction. HMRC recognises this, and the Making Tax Digital (MTD) rules include specific provisions for retailers. Under MTD for Income Tax Self Assessment (MTD ITSA), you can record your daily gross takings as a single digital entry per day rather than logging every individual sale.
From 6 April 2026, sole traders and landlords with qualifying income above £50,000 must keep digital records and submit quarterly updates to HMRC. If you run a shop, market stall, café, or any other business that makes retail sales, this article explains exactly how the daily takings rules work, what records you must keep, and how to handle mixed payment methods.
What counts as retail income under MTD
HMRC defines a retail sale as any sale where you do not normally issue an invoice to the customer. This covers a wide range of businesses:
- High street shops and boutiques
- Market stalls and car boot traders
- Cafés, takeaways, and food vans
- Mobile traders (ice cream vans, florists, window cleaners collecting payment on the spot)
- Hairdressers and barbers
- Newsagents and convenience stores
If your customers pay at the point of sale without receiving a formal invoice, your income is retail income for MTD purposes. If you sometimes issue invoices (for example, for bulk or trade orders) but mostly sell over the counter, the retail takings rules apply to the non-invoiced portion of your sales.
The daily gross takings rule
Under standard MTD record-keeping, you must record each transaction individually with the date, amount, and category. For retail businesses, HMRC permits a simplified approach: you can record your total gross takings for each day as a single figure.
This means that if your shop takes £840 on a Tuesday across 73 separate customer transactions, you record one entry of £840 for that day. You do not need to create 73 individual records. The daily total is your digital record.
The key requirements for recording daily gross takings are:
- One entry per day: Record the total gross takings for each trading day
- Date: Each entry must be dated
- Gross amount: Record the full amount taken before any deductions
- Digital format: The record must be held in MTD-compatible software or a digital tool that links to your submission software
You cannot simply keep a paper till roll and enter a weekly or monthly total into your software. The record must be made digitally on a daily basis. However, there is no requirement to enter the data in real time. Recording yesterday’s takings the following morning, for example, is perfectly acceptable as long as each day’s figure is captured as a separate entry.
How to calculate your daily gross takings
Your daily gross takings figure should represent the total amount received from customers during that trading day. This includes:
- Cash received
- Card payments (debit and credit)
- Contactless payments
- Mobile payments (Apple Pay, Google Pay)
- Vouchers and gift cards redeemed
It should not include VAT collected (if you are VAT-registered), money received that is not sales income (such as a personal loan from a friend), or refunds given to customers. Refunds should be recorded separately on the day they occur, reducing that day’s net takings figure.
If you use an electronic till or point-of-sale (POS) system, the end-of-day Z-reading gives you the daily total. This is the figure you transfer into your MTD software. If you do not use an electronic till, you will need to count your cash, add up your card terminal receipts, and calculate the total manually each day.
Handling mixed payment methods
Most retailers accept multiple payment methods. Under MTD, you do not need to break down your daily takings by payment type for the quarterly update itself. The single daily total is sufficient for your income record.
However, keeping a breakdown by payment method is strongly recommended for your own reconciliation purposes. Card payments create an automatic audit trail through your payment processor. Cash does not. If HMRC ever queries your figures, being able to show that £840 in daily takings comprised £310 in cash and £530 in card payments (verifiable against your card terminal records) is far stronger than a single unsupported number.
A practical approach is to record two lines per day in your software: one for cash takings and one for card/electronic takings. Both still fall under the daily gross takings simplification, but the split gives you a built-in reconciliation check.
Worked example: Tom’s market stall
Tom runs a fruit and vegetable stall at a local market three days a week (Wednesday, Friday, Saturday). He is a sole trader with annual gross takings of £54,000, placing him in Phase 1 of MTD ITSA from April 2026. He accepts cash and card payments through a portable card reader.
Tom’s daily record-keeping
At the end of each market day, Tom counts his cash takings and checks his card reader’s daily summary. He enters the figures into his MTD software (a simple spreadsheet-based tool that feeds into his submission software). Here is a typical week:
| Date | Cash | Card | Daily total |
|---|---|---|---|
| Wed 8 April 2026 | £285 | £195 | £480 |
| Fri 10 April 2026 | £310 | £240 | £550 |
| Sat 11 April 2026 | £420 | £365 | £785 |
Tom records three entries for this week, one per trading day. He does not trade on the other four days, so no entries are needed. Over the first quarter (6 April to 5 July 2026), Tom accumulates approximately 39 daily entries covering his trading days.
Tom’s quarterly update
By 7 August 2026 (the Q1 deadline), Tom’s software totals his daily takings for the quarter: £13,500 in gross income. He also records his expenses for the period: £8,200 in stock purchases, £780 in market pitch fees, and £120 in card reader charges. His software submits the quarterly update to HMRC showing:
- Gross income: £13,500
- Total expenses: £9,100
- Net profit for Q1: £4,400
Tom does not need to send HMRC the individual daily records. The quarterly update contains the summarised figures. However, he must retain the daily records digitally in case HMRC requests them.
Tom’s expenses
While the daily takings rule simplifies Tom’s income records, his expenses must still be recorded individually. Each stock purchase, pitch fee payment, and equipment cost needs its own dated entry with the amount and category. This is no different from any other sole trader under MTD.
Three-line accounts and smaller retailers
If your annual turnover is below £85,000, you may be eligible to use three-line accounts (also known as simplified accounts) for your Self Assessment. Three-line accounts require only three figures: total income, total expenses, and net profit.
Under MTD ITSA, the quarterly updates follow a similar simplified format for those who qualify. You still need to maintain underlying digital records of your daily takings, but the information submitted to HMRC each quarter is a summary rather than a line-by-line breakdown.
For a retailer like Tom, whose turnover is £54,000, three-line accounts are available. He records his daily takings and expenses in his software throughout the quarter, and the quarterly update sends the totalled figures. Retailers with turnover above £85,000 must categorise their expenses in more detail, but the daily takings rule still applies to the income side.
What about VAT-registered retailers?
If your retail turnover exceeds the current VAT threshold of £90,000, or you have voluntarily registered for VAT, you already have obligations under MTD for VAT. Adding MTD ITSA does not change how you record your daily takings, but it does add a second set of quarterly submissions.
Your VAT records must account for the VAT element of each sale. Your MTD ITSA records capture the gross income (excluding VAT). If you use a single piece of software for both, it should handle the separation automatically. Your daily takings entry in your POS system feeds both the VAT return and the income tax quarterly update.
The daily gross takings figure for MTD ITSA purposes is the net-of-VAT amount. If your till shows £1,200 including VAT at 20%, your MTD ITSA daily takings record is £1,000.
Retaining supporting records
Recording daily gross takings digitally does not remove the need to keep supporting evidence. HMRC may ask to see:
- Till rolls or Z-readings (these can be photographed or scanned and stored digitally)
- Card terminal settlement reports
- Bank statements showing card payment deposits
- Purchase invoices for stock
- Receipts for business expenses
You must retain these records for at least five years after the 31 January filing deadline for the relevant tax year. Digital storage is acceptable. A photograph of a till roll stored in a cloud folder counts as a digital record, provided you can retrieve it if HMRC asks.
Common mistakes retailers make with MTD records
Based on HMRC guidance and common practice, these are the errors retail businesses should avoid:
- Recording weekly totals instead of daily: The simplification allows daily totals, not weekly or monthly. Each trading day needs its own entry.
- Forgetting non-trading days: If you do not trade on a particular day, you do not need an entry. Do not enter zero for days you are closed.
- Mixing personal and business money: If you take cash from the till for personal use, record this as a drawing, not as a reduction in takings.
- Ignoring card payment timing: Card payments may settle in your bank account one or two days after the sale. Record the takings on the day of the sale, not the day the money reaches your bank.
- Not recording refunds separately: Refunds should appear as separate entries on the day they are given. Do not simply reduce a day’s takings without a record of why.
Software options for retail businesses
Retailers need software that allows quick entry of daily takings totals. Some options to consider:
- Cloud accounting software (Xero, QuickBooks, FreeAgent): All support daily sales entries and MTD ITSA submissions. Best for retailers who want a full accounting package.
- Spreadsheet-based tools: HMRC allows the use of spreadsheets (Excel, Google Sheets) to maintain records, provided you use bridging software to submit the quarterly updates. This suits retailers who want minimal software costs.
- POS systems with MTD integration: Some electronic till systems connect directly to accounting software, automating the daily takings transfer.
Whichever approach you choose, the software must be able to submit quarterly updates to HMRC through the MTD API. Our compatible software guide lists the options available.
Preparing your retail business for MTD
If you are a retailer with qualifying income above £50,000 and have not yet started digital record-keeping, take these steps before April 2026:
- Choose your software: Pick an MTD-compatible tool that suits your business size and budget
- Set up a daily routine: Build the habit of recording your takings at the end of each trading day
- Separate cash and card: Even though MTD does not require it, splitting your daily total by payment method makes reconciliation easier
- Digitise your expense records: Photograph receipts and store them in a cloud folder or within your accounting software
- Register for MTD ITSA: Sign up through your HMRC online account before your first quarterly deadline
The daily gross takings simplification means MTD does not require you to overhaul how you run your till. You can continue selling as normal. The change is in how you capture and store the end-of-day total — it must be digital, it must be daily, and it must be held in a format that connects to your MTD submission software.
Need help setting up MTD for your retail business?
Jack Ross Chartered Accountants have helped retailers across Manchester prepare for Making Tax Digital. Whether you run a market stall or a high street shop, our MTD advisory team can recommend the right software and set up your digital record-keeping so you are ready from day one. Book a free consultation to get started.
Sources
- GOV.UK: Use Making Tax Digital for Income Tax
- GOV.UK: Keeping records for Making Tax Digital for Income Tax
- GOV.UK: Record keeping for self-employed and partnerships
- GOV.UK: VAT Notice 727/3 — Retail schemes
Frequently asked questions
Do I need to record every individual sale under MTD?
No. If you make retail sales (sales where you do not issue an invoice to the customer), HMRC allows you to record your total daily gross takings as a single entry per trading day. You do not need to create a separate digital record for each customer transaction.
Can I enter my takings weekly or monthly instead of daily?
No. The simplification applies to daily totals only. You must record a separate figure for each day you trade. Weekly or monthly totals do not satisfy the MTD record-keeping requirements for retail businesses.
What if I trade at multiple locations in one day?
You can combine your takings from all locations into a single daily total, or record each location separately. Either approach satisfies the daily gross takings requirement, but recording by location may help with your own management reporting.
Do I still need to keep till rolls and receipts?
Yes. While your digital record is the daily total in your MTD software, you should retain supporting evidence such as till rolls, Z-readings, and card terminal reports. These can be stored digitally (photographs or scans) and must be kept for at least five years after the relevant filing deadline.
Does the daily takings rule apply to online sales too?
Online sales where you issue invoices or order confirmations to each customer are not retail sales for MTD purposes. These must be recorded individually. However, if you sell online without issuing individual invoices (for example, through a market platform that does not generate per-customer invoices), the daily takings approach may apply. Check with your accountant or HMRC if you are unsure.
