Last checked 19 October 2026
Quick answer
A bank feed is a link between your bank account and your bookkeeping software that imports your transactions automatically. HMRC lists linking to your business bank account as one way software can create digital records for Making Tax Digital for Income Tax. But HMRC also says you may need to add detail, such as the Self Assessment category, that some transactions may not appear in full, and that it’s your responsibility to check your records are accurate before you send a quarterly update.
This is general information, not tax advice. Check GOV.UK or speak to an accountant about your situation. Why we say this.
Typing every payment into a spreadsheet is the part of bookkeeping most people dread. A bank feed promises to do it for you. For many sole traders it does save a lot of time, but it doesn’t do the whole job, and it’s worth knowing where the gaps are before Making Tax Digital (MTD) makes accurate records a quarterly task.
What a bank feed is
A bank feed is a connection that lets your bookkeeping software read transactions from your bank account. Once it’s set up, payments in and out appear in the software without you typing them. You then match or categorise each one.
HMRC’s guidance on choosing the right software says software that creates digital records can do so by:
- linking to your business bank account to import transactions automatically
- scanning receipts and invoices
- manually entering your income and expenses
So a bank feed is one option, not a requirement. Many people use a mix of all three.
How the connection works
Open Banking Limited, the organisation behind the UK’s open banking website, says on its Why open banking is safe page that businesses can securely connect bank data to their accounting platform. It says you choose which apps you use, what information they can access and for how long, and that you’re never asked to share your bank login details with anyone other than your own bank.
The Financial Conduct Authority (FCA) calls a service that shows you information from your bank accounts an account information service provider. Its consumer guidance says these companies can only provide that service with your explicit consent, and that you should check the provider is authorised or registered with the FCA.
In practice, you start the connection in your bookkeeping software, pick your bank, and confirm the link in your banking app or online banking. Open Banking Limited says you can withdraw access through the app, or by contacting your bank.
What MTD needs from each record
HMRC’s Create digital records guidance says each digital record needs:
- the amount
- the date the income was received or the expense incurred
- the category
A bank feed brings in the amount and date. The category is usually your job. HMRC says MTD uses the same categories of income and expenses as Self Assessment, and that if your software connects to your bank account you may need to add extra detail, such as the relevant Self Assessment category.
What a feed can miss
HMRC says some transactions may not appear in full in your bank feed and will need to be created separately as a digital record. Common examples include:
- Cash. Cash you take or spend never passes through the account.
- Payments through another account. A business cost paid on a personal card, or income paid into a different account.
- Payouts net of fees. Card and payment providers may pay you in batches with fees already taken off. Our guide to taking card payments explains why the payout may not match your sales.
- Mixed transactions. One payment that covers business and personal items, which needs splitting.
HMRC says it’s your responsibility to check your digital records are accurate before you send your quarterly update. Our guide to quarterly updates explains what you send and when.
Keep your bank statements
A feed doesn’t replace your records. HMRC says you must keep the original records or supporting documents you used to prepare your tax return, such as bank statements and invoices. GOV.UK’s Business records if you’re self-employed guide lists bank statements among the types of proof to keep, for at least 5 years after the 31 January submission deadline for the tax year.
Personal or business account?
GOV.UK says you might be able to use a personal or business bank account for your business, and to check with your bank which type you can use. A separate account means your feed only brings in business transactions, which makes categorising much quicker. Our guide to a separate business bank account covers the pros and cons.
A simple routine
HMRC says you should create digital records as close to the date of the transaction as possible. With a bank feed, a short weekly session works well for many people:
- Open the bank feed in your software.
- Match income to invoices and expenses to receipts.
- Categorise anything left over.
- Add any cash or other transactions the feed didn’t bring in.
- Note anything you’re unsure about to ask your accountant.
Our guide to business records covers what to keep alongside your software.
Choosing software with a bank feed
If a bank feed matters to you, check the software works with your bank before you sign up, and that the software is in HMRC’s finder. Our guides to checking whether an app is MTD software and bookkeeping software for new sole traders explain what to look for.
Frequently asked questions
Do I need a bank feed for Making Tax Digital?
No. HMRC lists bank feeds as one way to create digital records, alongside scanning receipts and entering transactions by hand.
Is it safe to connect my bank account?
Open Banking Limited says you’re never asked to share your bank login details with anyone other than your own bank. The FCA says to check the provider is authorised or registered with it. Read the terms before you agree.
Does the feed categorise transactions for me?
Some software suggests categories, but HMRC says you may need to add detail such as the Self Assessment category, and that checking accuracy is your responsibility.
What if my feed stops working?
Reconnect it in your software, then check for any gap or duplicated transactions before your next quarterly update.
Sources
All checked on 19 October 2026.
- Create digital records (GOV.UK, HMRC)
- Choose the right software for Making Tax Digital for Income Tax (GOV.UK, HMRC)
- Business records if you’re self-employed (GOV.UK)
- Why open banking is safe (Open Banking Limited)
- Open banking FAQs (Open Banking Limited)
- Account information and payment initiation services (Financial Conduct Authority)
Where to check
What changed. : . 29 October 2026: First published.
