What records do I need to keep as a sole trader?
HMRC requires sole traders to keep records of all income and expenses. Here's what you need to keep, how long to keep it, and the simplest ways to stay organised.
7/22/20262 min read
What records do I need to keep as a sole trader?
HMRC requires sole traders to keep records of all business income and expenses. You don't send these to HMRC when you file your Self Assessment return, but you need to have them available if HMRC opens an enquiry into your tax affairs - which they can do up to 5 years and 10 months after the relevant tax year.
Good record keeping also makes completing your Self Assessment return much faster. If you've kept accurate records throughout the year, your return is just a matter of pulling the numbers together.
Income records
Keep a record of everything you earn from your business. This means:
• Sales invoices - for every piece of work or product sold, keep a copy of the invoice you issued
• Bank statements - showing money received into your business account
• Cash sales - a log of any cash payments received, even if you don't issue a formal invoice
• Any other records that show what you earned and when
Expense records
For every business expense you claim, keep the receipt or proof of payment. This includes:
• Receipts and invoices from suppliers
• Bank and credit card statements showing business purchases
• Mileage logs - recording the date, destination, purpose and miles for each business journey
• Utility bills, if you're claiming a proportion for working from home using the actual costs method
How long do you need to keep records?
For sole traders, HMRC requires you to keep records for at least 5 years after the 31 January filing deadline for the relevant tax year. For the 2025/26 tax year (filed by 31 January 2027), that means keeping records until at least January 2032.
Digital or paper?
HMRC accepts both. From April 2026, sole traders with gross income over £50,000 are required to keep digital records as part of Making Tax Digital for Income Tax. If you're below that threshold for now, you can still keep paper records - though digital is easier to maintain and search.
If you're keeping paper receipts, a simple folder system organised by month or category is enough. Many sole traders find it easier to photograph receipts immediately using a receipt capture app - the image counts as the record, and you don't have to worry about paper copies fading or getting lost.
See our Receipt Capture directory for apps that make this straightforward, and our Accounting and Bookkeeping directory if you want to keep everything in one place with proper bookkeeping software.
What records are easy to miss?
A few things that often get overlooked:
• Business mileage - easy to forget to log individual journeys, and the records can't be reconstructed later
• Cash income - any cash you receive needs to be recorded, even if it doesn't go through a bank account
• Bank interest on your business account - this counts as income and needs to be included on your return
• Personal expenses that are partly for business - if you're claiming a proportion of your phone bill, keep the bills as evidence of the split
The simplest approach
The easiest way to stay on top of records is to make it a habit throughout the year rather than trying to reconstruct everything in January. A business bank account helps enormously - if all your business income and expenses go through one account, your bank statements become a near-complete record. See our Business Banking directory for both free and paid options. Add a mileage log and photograph your receipts as you go, and you'll have everything you need.
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