Record-keeping for sole traders: what HMRC requires and for how long

Good records are not just admin. They support your Self Assessment return, protect expense claims, and make it easier to answer HMRC questions if your figures are checked later.

What records do sole traders need?

HMRC expects you to keep enough records to show how you worked out your business profit. In practice, that means keeping evidence of sales, expenses, business bank transactions, mileage, stock, assets, and any calculations used to split business and private costs.

Records that count

• Sales invoices, receipts, till records, and payment processor statements.
• Purchase invoices, supplier receipts, and card statements.
• Bank statements for business income and expenses.
• Mileage logs and travel evidence.
• Working-from-home calculations and business-use percentages.
• Payroll, CIS, VAT, pension, or loan records where relevant.
• Notes explaining unusual transactions or estimates.

The 5-year retention rule

Sole traders normally need to keep records for at least 5 years after the 31 January Self Assessment submission deadline for the relevant tax year. For example, records for 2025/26 support a return due by 31 January 2027, so they should usually be kept until at least 31 January 2032.

Digital vs paper records

HMRC does not usually require every original paper receipt if you have clear digital copies, but your records must be readable, complete, and backed up. A photo of a receipt is useful only if you can find it later and connect it to the transaction in your accounts.

If you are affected by Making Tax Digital, digital record keeping becomes more important. Read the Making Tax Digital for sole traders guide if your income may cross the rollout thresholds.

What can trigger an HMRC check?

HMRC can open checks for many reasons, including random selection, late or inconsistent returns, figures that do not match third-party data, unusual expense patterns, VAT discrepancies, or repeated losses. A check does not automatically mean you have done something wrong, but weak records make it harder to respond.

How to make records investigation-ready

1. Use a separate business bank account where possible.
2. Reconcile income and expenses monthly, not once a year.
3. Keep evidence for every significant expense claim.
4. Write down how you split mixed-use costs like phone, broadband, and home office.
5. Back up digital records somewhere separate from your laptop or phone.

Records and tax estimates

Your tax estimate is only as good as the profit figure behind it. Once your records are up to date, use the self-employed tax calculator and weekly tax set-aside calculator to plan for the bill.

Official source

GOV.UK explains Self Assessment record keeping here: Business records if you're self-employed.