MTD Bank Feeds and Receipt Apps: A Practical Guide

Bank feeds and receipt apps are the easiest way to keep the digital records that Making Tax Digital for Income Tax requires, because they move transactions into your software automatically instead of you typing them in. They do not do the whole job, though: you still have to check, categorise and reconcile what comes through before each quarterly update. This guide explains how MTD bank feeds and receipt capture work, how to set them up, and the mistakes that cause wrong quarterly figures.

Key takeaways

• MTD for Income Tax applies from 6 April 2026 for qualifying income over £50,000, from 6 April 2027 over £30,000 and from 6 April 2028 over £20,000.
• A bank feed imports transactions. It does not decide what they are for.
• Receipt apps capture the evidence and the expense details from a photo.
• Reconcile to your bank statement before every quarterly update.
• A separate business account makes bank feeds far more useful.

What is a bank feed?

A bank feed is a secure, read-only connection between your bank account and your bookkeeping software. Once you give permission through your bank, the software pulls in each payment in and out, usually daily, with its date, amount and the description your bank shows. You then assign each line to a category such as fuel, phone or sales, and the software builds your income and expense totals from those categories.

Receipt capture is the other half. You photograph a receipt or forward an emailed invoice, and the app reads the supplier, date and amount and stores the image. The best set-ups then match the receipt to the bank feed line, so the payment and its evidence sit together.

Why this matters for Making Tax Digital

Under MTD for Income Tax, sole traders and landlords in scope must keep digital records of their business income and expenses and send a quarterly update to HMRC from compatible software. The fixed phasing is: qualifying income over £50,000 in 2024/25 means joining from 6 April 2026, over £30,000 in 2025/26 means 6 April 2027, and over £20,000 in 2026/27 means 6 April 2028. HMRC explains the rules in its guide to using Making Tax Digital for Income Tax, and our article on MTD digital records covers what each record must contain.

Four quarterly updates a year means four deadlines a year. If you are in the first cohort, the update for the quarter to 5 October 2026 is due by 7 November 2026. Feeding transactions in as they happen spreads the work out, so each update becomes a check rather than a scramble. Our MTD quarterly update deadlines guide lists every date.

Bank feeds, receipt apps and manual entry compared

Most people end up using a mix: a bank feed for the business account, a receipt app for evidence and cash spending, and occasional manual entries for anything else. HMRC keeps a list of software compatible with MTD for Income Tax. Check the product you choose is on it.

Setting up a bank feed: step by step

1. Choose MTD-compatible software. Confirm it supports bank feeds for your bank and, if you want it, receipt capture.
2. Use a business-only account if you can. Our guide to a separate business bank account explains why it saves so much time.
3. Connect the feed. The software sends you to your bank to approve read-only access. Note when the permission will need renewing.
4. Pick a start date. Import from the start of the tax year, 6 April, or from the date you joined MTD, so nothing is counted twice.
5. Set up rules. Tell the software that a regular payment to your phone provider is always "phone", for example. Review these rules each quarter.
6. Add receipts as you go. Photograph receipts the day you get them and let the app match them to the bank line.
7. Reconcile before each update. The software balance must match your bank statement on the last day of the quarter. See our bank reconciliation guide.
8. Submit the quarterly update. Review the totals by category, then send them from the software before the deadline.

Worked example (illustrative example)

Illustrative example only, not a real client. A self-employed electrician with qualifying income of about £60,000 joined MTD on 6 April 2026. In the first quarter they typed every transaction into a spreadsheet from paper statements, which took most of a weekend.

For the second quarter they opened a business-only account, connected a bank feed and set rules for their regular suppliers, van fuel and phone. Around 150 transactions came through. Rules categorised most of them automatically, about 20 needed a manual decision, and three were duplicates of receipts they had already photographed, which they deleted. A reconciliation showed the software was £84 short of the bank balance: one cash deposit from a customer had been missed when the feed lapsed for two days. Once it was added, the balance matched and the update went in comfortably before 7 November 2026.

The lesson is that the feed removed most of the typing, but the reconciliation is what caught the error.

Common mistakes

• Trusting the feed blindly. Software guesses categories from the bank description. A payment to a supermarket could be stock, fuel or groceries, and only you know which.
• Leaving personal spending in. On a mixed account, every personal payment must be excluded, or your expenses will be overstated.
• Double counting. A receipt entered as a new expense and also imported through the feed counts twice. Match, do not duplicate.
• Ignoring a lapsed connection. When bank permission expires, the feed stops quietly. Check the last imported date before each update.
• Forgetting cash. Cash takings and cash expenses never appear in a bank feed. Record them separately, as covered in our guide to petty cash and cash sales records.
• Throwing away evidence. A bank line shows you paid, not what you bought. Keep receipts for as long as the record-keeping rules require.

A quick quarterly checklist

• Feed connected and imported up to the last day of the quarter.
• Every transaction categorised, with personal items excluded.
• Receipts matched, duplicates removed.
• Cash income and expenses added.
• Software balance agrees with the bank statement.
• Totals look sensible against the previous quarter.
• Update submitted before the deadline, and the confirmation saved.

How we can help

We are a London-based specialist gig-economy and MTD accounting practice working on fixed monthly fees. We can connect your bank feed, set up the rules, review your categories each quarter and submit your MTD updates for you. MTD compliance starts from £49 per month, and full bookkeeping from £150 per month. See our MTD compliance service, check our pricing, or contact us before your next quarterly deadline.