You do not send your records to HMRC with your Self Assessment tax return, but you must keep them. They let you work out your profit or loss, and you must show them to HMRC if asked. Your records have to be accurate, and you must be able to pick out your business transactions from your personal ones.
What to keep
Keep a record of every sale and every business expense, together with the proof behind each one.
Most small businesses use the cash basis, which is the default method from the 2024 to 2025 tax year. You record income and expenses when the money arrives or leaves. If you opt out and use traditional accounting, you record them by the date of the invoice or bill, which is why the extra records for traditional accounting are listed above.
If you run more than one business, keep separate records for each. Keep your personal income records as well, because the figures on your return must add up.
How long to keep them
The clock runs from the 31 January filing deadline for the tax year, not from the end of the tax year itself.
If HMRC opens an enquiry, keep your records until it ends. If records are lost, stolen or destroyed and you cannot replace them, do your best to work out the figures, and tell HMRC on your return that you have used estimated or provisional figures.
Keep them on paper or digitally
You can keep the original documents or keep the information in them in another form, such as a scan or a photograph of a receipt. Thermal till receipts fade, so copy them soon after you get them. Spreadsheets and accounting software are both fine for recording your income and expenses, until Making Tax Digital for Income Tax applies to you.
Keep digital records for Making Tax Digital
Making Tax Digital for Income Tax applies to sole traders and landlords whose qualifying income is above a set threshold. Qualifying income is your total self-employment and property income before expenses, taken from your tax return for an earlier year.
Once it applies to you, you create and store a digital record of each sale and expense in software that works with Making Tax Digital for Income Tax. Each record shows the amount, the date and the category, using the same categories as Self Assessment. The software adds your records together into quarterly updates, which are summaries of totals, not tax returns.
You still keep the original paperwork, such as bank statements and invoices, as well. If you use more than one software product, your records must be digitally linked between them. Once a record has been sent in a quarterly update, do not copy it by hand or cut and paste it into other software.
You can start well before the date it applies to you. Signing up voluntarily lets you learn the software with no deadline pressure.
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Record every sale and expense
Enter each one when it happens, with its date, amount and category, so your figures are never rebuilt from memory.
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Keep the proof for each entry
Hold invoices, receipts, till rolls, bank statements and paying-in slips, on paper or as clear scans, and copy thermal receipts straight away.
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Use a separate business bank account if you can
Ask your bank whether you can use a personal or a business account for business transactions, and keep business payments distinguishable from personal ones.
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Keep everything until five years after the 31 January deadline
Diarise the date for each tax year, and keep records longer if HMRC has opened an enquiry.
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Back up your digital records
Store them in cloud storage or on a separate drive so one failure cannot lose them.
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Choose software that works with Making Tax Digital for Income Tax
Check your qualifying income against the thresholds, then pick software from the HMRC list before the date the rules apply to you.
Business records if you're self-employed (opens in a new tab)
Legal basis
Primary legislation and key regulations
Browse UK legislation (opens in a new tab) legislation.gov.uk