What records sole traders and landlords need to keep
Good records make your quarterly updates quick and your tax return defensible. This is the practical list. HMRC's own guidance is the authority; this is a summary.
Income
Every sale or rental receipt with its date and amount: invoices you issue, takings, rent received. If you use the cash basis, the date money arrives is what counts.
Expenses
Every business cost with the date, supplier and amount, grouped by type: stock and materials, premises, repairs, travel, admin, professional fees, and so on. Keep the receipt or invoice as evidence.
Some costs are only partly allowable, such as a phone you also use privately, so you claim only the business share. Others, such as entertaining clients, cannot usually be claimed at all. Record them anyway so your figures reconcile.
Mileage
If you claim the simplified mileage rate for a vehicle, keep a log: date, journey purpose, and miles. You cannot also claim that vehicle's running costs.
How long to keep them
Keep records for at least five years after the 31 January submission deadline for the tax year they relate to.
Digital records under MTD
MTD requires records to be kept digitally, and figures to flow from those records to HMRC through compatible software without retyping. HMRC says you must keep the original records or supporting documents, or copies of them. If you keep a photo or scan, make sure it is clear and complete. Your income and expenses must also be kept as digital records.
Common questions
How long do I need to keep business records?
At least 5 years after the 31 January submission deadline for the tax year they relate to.
Can I keep photos of receipts instead of the paper?
HMRC says you must keep the original records or supporting documents, or copies of them. If you keep a photo or scan, make sure it is clear and complete.
Do I send my receipts to HMRC?
No. Under Making Tax Digital your software sends totals by category. You keep the receipts as evidence in case HMRC asks.
Sources: GOV.UK: Keeping your pay and tax records. This is general information, not tax advice; check GOV.UK or an accountant for your situation.
Check where you stand in a minute
Our free Making Tax Digital checker tells you whether and when MTD for Income Tax applies to you. Nothing you type leaves your browser.