Good record-keeping helps you manage your money, complete your tax return accurately, and avoid unnecessary stress at the end of the year. But, what records do you need to keep exactly, how long for, and what happens if you lose them? We answer all those questions right here.
There are different rules for limited companies when it comes to accounting and records. In this guide, we’re focusing on sole traders and partnerships, so if that’s you, read on!
HMRC expects you to keep accurate records of your income and expenses so you can submit an honest and complete Self Assessment tax return each year. Beyond ticking boxes for the taxman though, clear records also help you. They give you a real-time view of your finances, help you track profitability, claim all the expenses you’re entitled to, and avoid any unexpected tax bills.
Good records aren’t just for tax season, either. You might need them when applying for a mortgage, business loan, grant, Universal Credit, or even a business bank account. Lenders and support schemes often ask for evidence of your income, and being able to provide that quickly can make a big difference.
And if HMRC ever asks questions about your return or opens an enquiry, your records are your safety net. Without them, you could face penalties, miss out on deductions, or pay more tax than necessary.
If you’re self-employed as a sole trader or a partner in a partnership, you need to keep records of your business income and expenses. These form the basis of your Self-Assessment tax return and help show how much profit you’ve made.
You’ll also need to keep records of any other personal income (such as employment earnings, rental income, dividends, or interest) so you can report your full income to HMRC.
At a minimum, your business records should include:
Sales and income. Invoices, receipts, or other proof of payments you've received.
Business expenses. Receipts, bank statements, and records of anything you’ve bought for the business, from office supplies to travel costs.
Bank statements. Especially if you have a separate business account (which is strongly recommended).
Mileage logs. If you use a vehicle for work, keep a record of business journeys.
VAT records. If you're VAT-registered, you'll also need to keep detailed VAT records and receipts.
Payroll records. If you employ anyone, you’ll need to track wages, PAYE, and National Insurance.
Personal income: This includes employment income if you have a part-time job, income from savings and investments, and rental income.
It’s a good idea to store them digitally if you can, especially because almost everyone will be required to use Making Tax Digital as the government gradually phases it in.
Read more: Making Tax Digital: A Complete Guide for the Self Employed
HMRC requires you to keep these records for at least five years after the 31 January submission deadline of the relevant tax year.
For example, for the 2023–24 tax year (which ends on 5 April 2024), the deadline for filing your Self Assessment tax return is 31 January 2025. That means you must keep your records until at least 31 January 2030.
Even if you stop trading or close your business, you still need to hold onto your records for the full retention period. HMRC can open an enquiry into your tax return during this time, and if they do, you’ll need to be able to back up your figures.
If you lose your business records, you’ll still need to do your best to provide figures to HMRC. You should rebuild what you can using:
When filing your tax return, tell HMRC if you’re using estimated figures (your best guess) or provisional figures (temporary figures while you wait for the actual figures).
You should also tell HMRC exactly what has happened and why you can’t provide the exact information requested.
If you’re unsure how to estimate something or want to avoid any potential issues, it may be worth getting help from an accountant or tax adviser.
Read more: Your Essential Guide to Self Assessment
Keeping clear, accurate records might not be the most exciting part of being self-employed, but it’s one of the most important! Whether you’re just starting out or have been in business for years, good record-keeping helps you stay organised, save time, and avoid unnecessary stress when tax season rolls around.
Remember: you don’t need to do it all manually. A bit of structure (and maybe a digital tool or two) can go a long way. And if you ever feel unsure, it’s perfectly okay to get advice from a professional.
HMRC requires you to keep these records for at least five years after the 31 January submission deadline of the relevant tax year.
For example, for the 2023–24 tax year (which ends on 5 April 2024), the deadline for filing your Self Assessment tax return is 31 January 2025. That means you must keep your records until at least 31 January 2030.
Even if you stop trading or close your business, you still need to hold onto your records for the full retention period. HMRC can open an enquiry into your tax return during this time, and if they do, you’ll need to be able to back up your figures.
If you lose your business records, you’ll still need to do your best to provide figures to HMRC. You should rebuild what you can using:
When filing your tax return, tell HMRC if you’re using estimated figures (your best guess) or provisional figures (temporary figures while you wait for the actual figures).
You should also tell HMRC exactly what has happened and why you can’t provide the exact information requested.
If you’re unsure how to estimate something or want to avoid any potential issues, it may be worth getting help from an accountant or tax adviser.
Read more: Your Essential Guide to Self Assessment
Keeping clear, accurate records might not be the most exciting part of being self-employed, but it’s one of the most important! Whether you’re just starting out or have been in business for years, good record-keeping helps you stay organised, save time, and avoid unnecessary stress when tax season rolls around.
Remember: you don’t need to do it all manually. A bit of structure (and maybe a digital tool or two) can go a long way. And if you ever feel unsure, it’s perfectly okay to get advice from a professional.
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