HMRC record keeping for the self-employed: what to keep and for how long

Record keeping is not the most exciting part of running a trade business, but it is one of the most important. HMRC can charge a penalty of up to £3,000 for each failure to keep adequate records — and that is before any additional tax assessments if they find income you cannot account for.

This guide covers exactly what records you are legally required to keep as a self-employed tradesperson in the UK, how long you need to keep them, and the practical ways to make the whole thing much less painful.

What records must you keep?

HMRC requires self-employed people to keep records of their business income and expenses. In practice, for a tradesperson this means:

Income records

• All sales invoices you have issued
• Bank statements showing money received
• Records of any cash payments received (a cash book or log)
• Records of any payments in kind (rare, but they count as income)

Expense records

• Receipts for all materials and tools purchased for the business
• Fuel receipts or mileage log if you claim vehicle costs
• Insurance premiums, subscription receipts
• Subcontractor invoices and CIS deduction statements
• Any receipts for work clothing, equipment, or professional fees

Bank records

• Business bank statements for the full period
• Records of any personal funds transferred into the business

VAT records (if VAT-registered)

• All VAT invoices issued to customers
• All VAT receipts received from suppliers
• VAT account (a record of input and output tax each quarter)
• Copies of all VAT returns submitted

How long do you need to keep records?

The standard rule for self-employed people is five years after the 31 January self-assessment filing deadline for the relevant tax year. So for the 2024/25 tax year (filed by 31 January 2026), you must keep records until at least 31 January 2031.

However, HMRC and most accountants recommend keeping records for six years as a safer margin, especially if you file late or have any complex entries.

There are situations where the retention period is longer:

• If you file your return more than four years late, you must keep records for 15 months after you file
• If HMRC opens a fraud enquiry, records can be required for longer still

VAT records

VAT records must be kept for six years — slightly longer than the basic income tax requirement. Under Making Tax Digital for VAT, these must also be kept digitally.

Do you have to keep digital records?

If you are VAT-registered, yes — under MTD for VAT you must keep digital records and submit returns via MTD-compatible software.

From April 2026, self-employed people earning over £50,000 must also keep digital records under Making Tax Digital for Income Tax. Paper records and transcribed spreadsheets will not be sufficient. From April 2027, the threshold drops to £30,000.

Even if you are below these thresholds, keeping digital records is good practice. A digital receipt stored in your phone is much easier to find during an enquiry than a faded paper one jammed behind the van seat.

What counts as an adequate record?

HMRC does not require a specific format. What matters is that you can show where your income came from and what you spent on the business. A scanned receipt stored in a folder on your phone counts. A spreadsheet with all your income and expenditure entries counts. What does not count is a vague memory of what you roughly spent.

For cash transactions specifically, HMRC expects a contemporaneous record — meaning you wrote it down at the time, not months later. A simple cash book (even a notes app on your phone) works.

What happens if your records are inadequate?

If HMRC opens an enquiry and finds your records are incomplete or missing, they can:

• Estimate your income based on their own calculations (which may be higher than reality)
• Charge a penalty of up to £3,000 per tax year for failing to keep records
• Charge interest and further penalties on any additional tax assessed

In practice, HMRC is more interested in whether you have made a genuine attempt to keep records than in prosecuting minor gaps. But if you cannot account for significant chunks of income or expense, the consequences can be severe.

Practical tips for tradespeople

Photograph receipts as you get them. A quick phone photo immediately after buying materials means you never lose a receipt. Most accounting apps let you attach photos directly to expense entries.

Keep a mileage log. If you claim vehicle expenses, a mileage log is essential. Record the date, destination, purpose, and miles for every business journey. Our mileage calculator can help you work out the value of your claims.

Separate business and personal finances. A dedicated business bank account makes record keeping much simpler. You can see at a glance what was business income and expenditure without having to filter out personal transactions.

Do a monthly reconciliation. Spend 30 minutes at the end of each month checking your bank statement against your invoices and expense records. Catching errors monthly is far less painful than doing a year of reconciliation in January.

Records to keep if you have employees or subcontractors

If you employ people, you also need to keep PAYE records for at least three years from the end of the tax year they relate to. If you use CIS subcontractors, keep records of all subcontractor invoices and CIS deduction statements for five years.

Useful tools

Our self-assessment calculator can help you estimate your tax bill while you are keeping your records throughout the year. For a complete overview of what you can claim as allowable expenses, see our guide to allowable expenses for self-employed tradespeople.

Summary

Keep all income and expense records for at least five years after your self-assessment filing deadline — six years if you want a safer margin. VAT records need six years. From April 2026, digital records are mandatory if you earn over £50,000. Use a dedicated business bank account, photograph receipts as you get them, and do a quick monthly reconciliation. It is far less work to keep records consistently than to reconstruct them later under pressure from HMRC.