RECORD KEEPING - SELF EMPLOYED

It’s best to get record keeping right from the start.  It will help you get better control of your business and help ensure you are claiming all the expenses and allowances you are entitled to. Besides, failure to do so can result in penalties from HMRC. What to keep:

• a record of all your sales invoices and takings
• a record of all your purchases invoices and expenses
• business assets you’ve bought (e.g. equipment)
• business assets leased or rented (e.g. lease agreements)
• value of stock at the end of your accounting period
• details of payments to employees (e.g. wages)
• business vehicle and travel costs
• interest from bank or building society accounts
• business liabilities (e.g. bank or credit card loans)
• details of assets sold or disposed of by the business for capital allowance purposes
• other money coming in (e.g. money you invest in your business)
• any other records of personal income (e.g. P60s & P11Ds)

MTD digital record-keeping - If your gross income from self-employment exceeds £50,000, Making Tax Digital for Income Tax (effective from April 2026) requires these records to be kept digitally, using compatible software, rather than on paper or in a standard spreadsheet without bridging software. Quarterly summaries must then be submitted to HMRC directly from your records, rather than compiled once a year. It's worth moving to digital record-keeping early, even if you're currently below the threshold, since it drops to £30,000 from April 2027 and £20,000 from April 2028.

The cash basis & simplified expenses scheme can also be used - This is designed for businesses with a turnover below the VAT threshold and the records kept will include details of money actually paid & received.  For cars, the business can use a mileage rate instead of claiming running costs.

How long to keep records - Typically this will be 5 years and 10 months after the end of the tax year to which the tax return relates. For example, the tax return and related records for the year ended 5 April 2026 will need to be kept until 31 January 2032.

Self-Employed pages ► Self Employed sole traders ■ Registration and National Insurance ■

■ Record keeping ■ Allowable Expenses ■ Home Working Costs ■ Fixed Rate Expenses ■

■ Cash Basis for the Self-Employed ■ Registering for VAT ■ Forming a Limited Company ■

Registered office: 61 Friar Gate, Derby, Derbyshire, DE1 1DJ   T: 01332 202660

Adrian Mooy & Co is the trading name of Adrian Mooy & Co Ltd.  Registered in England No. 05770414