Record keeping (self-employed)

You must keep accurate records for your business. For example, your accounts, records of tax you have paid and all other records of your income and outgoings. You'll need these to help you fill in your Self Assessment tax return or to answer any questions from HM Revenue & Customs (HMRC).

Small self-employed businesses may be able to use 'cash basis' accounting, based on the money going in and out of your business, rather than traditional accounting methods that cover stock on hand, amounts owed and so on.

Find out more about the cash basis on GOV.UK (Opens new window)

You can claim flat rate expenses for vehicles, use of home for business and use of business premises as a home.

Read about simplified expenses on GOV.UK (Opens new window)

On this page:

Business records you may need

Keeping up-to-date and accurate records from the start is important for your business. It makes it easier to fill in your tax return. A good record system helps you keep track of your expenses. You may have to pay a penalty if you don't keep records or if you don't keep your records for long enough.

Records you must keep

Your business records must include:

  • a record of all your sales and takings
  • a record of all your purchases and expenses

Records you may need

All businesses are different and there are many types of detailed records that you may need to keep for your tax return. Here are some examples:

  • cashbooks
  • invoices and receipts
  • electronic sales records or till rolls
  • mileage records
  • bank statements
  • P60s (if you are also employed)
  • payroll records (if you have employees)
  • rent books
  • hire purchase records
  • an inventory of stock on hand
  • a record of money taken out of the business for personal use

All this information will be useful for filling in your tax return and answering any questions that HMRC may have.

How to keep your records

Keep your records either on paper or on computer. For electronic records you must:

  • capture all the information (front and back)
  • save information in a readable format
  • keep a back-up

If you've got more than one business you'll need to keep separate records for each business.

Keep detailed records. It will make it easier to answer any questions that HMRC has about your tax return.

Top

Working in the construction industry

You'll need to keep records of all your income and outgoings - whether you're paid 'gross' or with some tax taken off. If some tax has been taken off you'll need to keep your payment statements and - if higher rate tax is taken, keep the verification number. You'll need these for your tax return to reclaim any overpayment of tax.

Record keeping for the Construction Industry Scheme (CIS) - read a detailed guide

Top

Capital allowances

You may be able to claim capital allowances for certain assets. Rather than claiming the whole cost at the time you buy, you reclaim the cost over time. You'll need to keep detailed records to support your claim.

It will help if you keep separate records of:

  • purchases and sales of assets, such as tools and computers
  • day to day running costs and sales

Capital allowances - find out more

Tax allowances and reliefs - read detailed guidance

Top

Records related to both business and personal use

It's important that you keep your business and personal records separate, so that you can work out exactly what relates to your business.

Sales or income

It's easy to make mistakes when you are recording sales if:

  • you take stock for you or your family to use
  • you supply goods or services to someone else in return for goods or services

Even if you don't record these transactions through a till you still need to keep a record of them. You should note down the goods or services taken or supplied and their normal retail price. Your business profits must be worked out using this value.

Expenditure or outgoings

You may have assets you use for both business and private use. For example, you may live in a flat above your shop premises and receive one shared electricity bill. For your tax return, you must keep enough records so that you can work out which costs relate to business use and which relate to your own use. If you use a vehicle for both business and private use, it's usually enough to keep a record of business and private mileage. Split the vehicle running costs in the same proportions.

You may want to use the new simplified expenses rules for your tax return.

Read about simplified expenses on GOV.UK (Opens new window)

Top

How long to keep your records

You must normally keep your business records for another five years after the online tax return deadline of 31 January, in case HMRC decides to check your return. The same date applies even if you've sent in a paper tax return.

An example

The tax return deadline for an online 2013-14 return is 31 January 2015.

You send your tax return in before this deadline.

You need to keep your records until 31 January 2020, 5 years later.

But if HMRC send you, or you send back your tax return very late, you may need to keep your records for longer. You need to keep them until the later of:

  • 5 years after the 31 January tax return deadline
  • 15 months after the date you sent your tax return

If HMRC has started a check

You may need to keep your records for longer if HMRC has started a check into your tax return. In this case you'll need to keep your records until HMRC writes and tells you they've finished the check.

Find out about time limits for non-business records

Read more about checks into tax returns

Top

If your records are lost or destroyed

If your business records have been lost or destroyed and you can't replace them you must let HMRC know what's happened. You should try to get the missing information in other ways. For example, you can ask banks for interest figures or copies of bank statements. They may charge for this.

Don't delay sending in the tax return while you wait for copies of records. Use the information you've managed to get together to fill in the tax return. If it turns out you can't replace the information you'll need to estimate the missing figures. You must tell HMRC whether any figures are:

  • estimated - you want HMRC to accept these as final
  • provisional - you are using these until you can confirm them (you must tell HMRC when you will give actual figures)

If you amend the tax return later and you've underpaid tax, you may have to pay interest and penalties.

Top

More useful links

More about keeping business records on Gov.uk (Opens new window)

Top