Self-employed individuals must keep business records for at least 6 years after the tax year they relate to. HMRC requires records of all income, expenses, and supporting documentation. Good records help you complete accurate tax returns, claim all allowable expenses, and defend your figures if HMRC enquires.
This guide explains what records to keep, how long to keep them, and the best ways to stay organised.
How Long to Keep Records
The 6-Year Rule
Keep all business records for 6 years after the end of the relevant tax year:
| Tax Year | Records Relate To | Keep Until | |----------|-------------------|------------| | 2024/25 | 6 Apr 2024 – 5 Apr 2025 | 5 April 2031 | | 2025/26 | 6 Apr 2025 – 5 Apr 2026 | 5 April 2032 | | 2026/27 | 6 Apr 2026 – 5 Apr 2027 | 5 April 2033 |
Why 6 Years?
HMRC can open an enquiry into your tax return for:
| Situation | Time Limit | |-----------|------------| | Random check | 12 months from filing | | Careless error | 6 years | | Deliberate error | 20 years |
The 6-year rule covers most situations. If you suspect errors in past returns, consider keeping records longer.
When to Keep Longer
Consider keeping records beyond 6 years if:
- HMRC has opened an enquiry
- You have complex tax affairs
- Records relate to assets you still own (for CGT)
- You've made losses to carry forward
What Records to Keep
Income Records
| Record Type | Examples | |-------------|----------| | Sales invoices | Invoices you issued to clients | | Bank statements | Showing income deposits | | Cash records | Receipts for cash sales | | Payment records | PayPal, Stripe, card receipts | | Contracts | Agreements showing expected income |
Key requirement: You must be able to show the source and amount of all business income.
Expense Records
| Record Type | Examples | |-------------|----------| | Receipts | Physical or digital receipts | | Invoices | Bills from suppliers | | Bank statements | Showing expense payments | | Credit card statements | Business card transactions | | Contracts | Service agreements |
Key requirement: Each expense claim must be supported by evidence of what was bought, when, and for how much.
Specific Expense Categories
Travel and Mileage: | Record | What to Include | |--------|-----------------| | Mileage log | Date, from, to, purpose, miles | | Fuel receipts | If claiming actual costs | | Public transport tickets | Train, bus, taxi receipts | | Parking receipts | At client sites, etc. |
Home Office: | Record | What to Include | |--------|-----------------| | Hours log | Hours worked from home each month (simplified expenses) | | Utility bills | If claiming actual costs | | Rent/mortgage statements | If claiming actual costs | | Calculation method | How you determined business proportion |
Equipment: | Record | What to Include | |--------|-----------------| | Purchase invoices | Showing item, date, cost | | Delivery notes | Proof of receipt | | Capital allowance calculations | How you claimed the cost |
Bank Statements
Keep all business bank statements. They provide:
- Proof of income received
- Proof of expenses paid
- Transaction dates
- Running record of business finances
Tip: Even if you categorise transactions in software, keep the underlying bank statements.
VAT Records (If VAT Registered)
If you're VAT registered, additional records include:
| Record | Details | |--------|---------| | VAT invoices issued | With VAT number and amounts | | VAT invoices received | For input VAT claims | | VAT returns | Copies of submissions | | Import/export documents | If applicable |
VAT records must also be kept for 6 years.
Digital vs Paper Records
HMRC Accepts Both
You can keep records in any format:
| Format | Acceptable? | |--------|-------------| | Paper receipts | Yes | | Scanned receipts | Yes | | Photographs of receipts | Yes | | Accounting software records | Yes | | Spreadsheets | Yes | | Bank PDF statements | Yes | | Email invoices | Yes |
Why Digital is Better
| Advantage | Explanation | |-----------|-------------| | Doesn't fade | Paper receipts fade; digital lasts | | Searchable | Find records quickly | | Backup possible | Cloud storage protects against loss | | Less storage space | No boxes of paper | | MTD-ready | Required from April 2026/2027 |
Making Tax Digital Requirements
From April 2026 (income over £50,000) or April 2027 (over £30,000), Making Tax Digital requires:
- Digital record keeping
- Records stored in compatible software
- Quarterly submissions to HMRC
Even if not yet required, adopting digital records now prepares you for MTD.
Organising Your Records
By Category
Create folders (physical or digital) for:
Business Records 2024-25/
├── Income/
│ ├── Invoices issued/
│ └── Sales records/
├── Expenses/
│ ├── Office costs/
│ ├── Travel/
│ ├── Professional fees/
│ └── Equipment/
├── Bank statements/
├── Mileage log/
└── Tax returns/
By Date
Alternatively, organise chronologically:
2024-25/
├── April 2024/
├── May 2024/
├── ...
└── March 2025/
Using Accounting Software
Most software organises records automatically:
| Feature | Benefit | |---------|---------| | Bank feed import | Transactions downloaded daily | | Receipt capture | Photograph and attach to transactions | | Automatic categorisation | AI sorts expenses | | Search function | Find any record quickly | | Export capability | Download for backup or HMRC |
TaxFolio stores records digitally and maintains them for 6+ years.
Record Keeping Best Practices
1. Record Immediately
Don't let receipts pile up. When you incur an expense:
- Photograph the receipt immediately
- Upload to your software or folder
- Categorise it
- Discard paper (optional, if digital copy clear)
2. Separate Business and Personal
Use a dedicated business bank account:
- Clear separation of transactions
- Easier to identify business expenses
- Simpler record keeping
- More professional appearance
3. Back Up Regularly
Protect against data loss:
| Method | Frequency | |--------|-----------| | Cloud storage (automatic) | Real-time | | External hard drive | Monthly | | Accounting software backup | Automatic | | Email copies of key docs | As needed |
4. Review Monthly
Set a monthly reminder to:
- Reconcile bank statements
- Categorise any uncategorised transactions
- Capture any outstanding receipts
- Check income matches invoices issued
5. Year-End Review
Before filing your tax return:
- Review all expense categories
- Check for missing income
- Verify mileage log is complete
- Ensure all receipts are stored
What Happens If Records Are Inadequate
HMRC Enquiry
If HMRC enquires and your records are poor:
| Consequence | Impact | |-------------|--------| | Expense claims disallowed | Pay more tax | | Income estimated higher | Pay more tax | | Interest charged | On underpaid tax | | Penalties applied | Percentage of unpaid tax |
Record Keeping Penalties
HMRC can charge penalties for inadequate record keeping:
| Situation | Maximum Penalty | |-----------|-----------------| | Failure to keep adequate records | £3,000 | | Failure to preserve records | £3,000 |
These are in addition to any tax and interest from incorrect returns.
Reasonable Excuse
Penalties may be reduced or cancelled if you have a "reasonable excuse":
| May Be Acceptable | Probably Not Acceptable | |-------------------|------------------------| | Records destroyed in fire/flood | Too busy to keep records | | Serious illness | Didn't know requirements | | Theft of records | Records were inconvenient | | Death in family | Trusted someone else to keep them |
Even with a reasonable excuse, you must take steps to reconstruct records if possible.
Reconstructing Lost Records
If records are lost, try to reconstruct:
Bank Statements
Contact your bank for duplicate statements. Most banks provide:
- Online access to 7+ years of statements
- Paper copies for a fee
- PDF downloads
Invoices
- Check email for invoice copies
- Contact clients for copies of invoices you issued
- Contact suppliers for copies of invoices they sent
Receipts
- Credit card statements show where you spent money
- Bank statements show amounts
- Contact vendors for duplicate receipts
Mileage
If mileage log is lost:
- Review calendar for business appointments
- Check emails for meeting confirmations
- Calculate distances using maps
- Document your reconstruction method
Records for Different Business Types
Sole Traders
| Record | Required? | |--------|-----------| | Income records | Yes | | Expense receipts | Yes | | Bank statements | Yes | | Mileage log (if claiming) | Yes | | Home office records (if claiming) | Yes | | Capital allowance calculations | Yes |
Landlords
| Record | Required? | |--------|-----------| | Rent received records | Yes | | Expense receipts | Yes | | Mortgage statements | Yes (for Section 24 credit) | | Property records | Yes | | Tenant agreements | Yes | | Agent statements | Yes |
VAT Registered
All of the above, plus:
- VAT invoices (issued and received)
- VAT return copies
- Import/export documents
- Evidence of VAT paid on purchases
Records to Keep Forever
Some records should be kept indefinitely:
| Record | Why | |--------|-----| | Property purchase documents | CGT calculation when you sell | | Share purchase records | CGT on disposal | | Pension contribution records | Lifetime allowance tracking | | Business acquisition documents | Base cost for CGT | | Gift records | Potential CGT/IHT implications |
Digital Record Keeping with TaxFolio
TaxFolio simplifies MTD-compliant record keeping:
- Bank connection — transactions import automatically
- Receipt capture — photograph and attach to expenses
- 6+ year storage — records maintained as long as required
- Searchable archive — find any record instantly
- Export function — download records if needed
- MTD-ready — meets digital record keeping requirements
- Automatic backup — cloud-based, always protected
- From £69.99/year — comprehensive record keeping included
Start your free 30-day trial and keep your records organised.
Summary: Record Keeping Checklist
What to Keep
- [ ] All sales invoices and income records
- [ ] All expense receipts and invoices
- [ ] Bank statements (all business accounts)
- [ ] Mileage log (if claiming vehicle costs)
- [ ] Home office records (if claiming)
- [ ] Equipment purchase records
- [ ] Contracts and agreements
- [ ] Tax returns (copies of submissions)
How Long
- [ ] 6 years after the tax year
- [ ] Longer for ongoing assets (property, shares)
- [ ] Longer if HMRC enquiry is open
How to Store
- [ ] Digital or paper (both acceptable)
- [ ] Backed up (cloud or external drive)
- [ ] Organised by category or date
- [ ] Searchable and accessible
- [ ] Protected from loss
Good records make tax returns easier, expense claims defensible, and HMRC enquiries manageable.