Can AI do Making Tax Digital for Income Tax for me?

Short answer

Mostly, yes: an AI connected to a proper ledger can read receipts and bank lines, put each one in the right HMRC category and prepare your quarterly figures. The update and the tax return must be sent through software on HMRC's list, and you stay responsible for what is sent.

What HMRC asks for, and what AI is good at

MTD needs a digital record of every income and expense item: amount, date and category, in the categories of Self Assessment (GOV.UK). That is exactly the routine work AI does well:

reading receipts, bills and invoices, including photos;
matching bank lines to documents;
choosing the category, such as travel, premises or repairs;
spotting gaps: a missing receipt, a payment twice, a quarter with no rent.

What stays with software and with you

The submission. Quarterly updates and the tax return go to HMRC from compatible software (GOV.UK). A chat window on its own is not that.
Your figures. Allowances, adjustments and private use are judgement calls. You sign off the return.
Your HMRC account. Signing up and authorising software use your own sign in.

A sensible setup

Let the AI work in a real double entry ledger rather than a chat log, so every figure has a document behind it. Keep the categories aligned with the self-employment (SA103) and property (SA105) pages. Review each quarter before it goes. Octobooks keeps the books of UK sole traders and landlords and sorts every entry into the categories of the self-employment pages (SA103F) and the UK property pages (SA105). Its Making Tax Digital for Income Tax connection is built and runs end to end against HMRC's test service (the sandbox). Octobooks is not on HMRC's list of compatible software yet; we are working towards recognition. Until it is listed, send your updates and your return through a product that is on the list.

Sources

Updated 2026-10-29. General information, not tax advice for your own case.