What records do I need to keep as a self-employed sole trader?

Keep a record of every sale and expense, with invoices, receipts and bank statements to back each one. Hold them for at least five years after the 31 January deadline for that tax year, so records for 2025/26 should be kept until 31 January 2032.

What to keep

• Sales: invoices you issue, till records, and platform payout statements.
• Purchases and expenses: receipts, supplier invoices, bank and card statements.
• Assets you buy for the business, with dates and prices.
• Mileage logs if you claim vehicle costs.
• Any private use figures behind an apportioned claim.
• If you are VAT-registered, VAT records must be kept for six years.

Digital records

Photographs and scans of receipts are fine as long as they are legible. If Making Tax Digital applies to you, digital records in compatible software are required, not optional.

What HMRC can do

HMRC does not ask to see your records when you file, but it can open a check on a return, and you will need to produce them. An expense you cannot evidence can be disallowed and the tax adjusted, with interest and possibly a penalty. Inadequate records can themselves attract a penalty of up to £3,000.

Worked example

What to do

1. Choose accounting software and keep every record in one place.
2. Photograph receipts the day you get them.
3. Reconcile your bank against your records monthly.
4. Use a separate business bank account.
5. Back up your records, and keep platform data before you close any account.

Common mistakes

• Mixing personal and business spending in one account.
• Throwing paperwork away after filing.
• Losing platform sales data when a shop or account is closed.
• Not logging cash payments.

Sources: GOV.UK: keep your business records