What records to keep
The records HMRC expects you to maintain — income, expenses, receipts — and what's optional but useful.
Articles
What records does HMRC expect you to keep?
Records of everything you earn and everything you spend. For a sole trader or landlord that means invoices issued, receipts for expenses, bank statements, and records of any grants or other income. If you are VAT registered or run a payroll, the VAT and PAYE records sit on top.
Limited companies keep the same income and expense records, plus company-specific ones: statutory registers, board minutes for key decisions, and records of assets, debts, and money owed to and by the company.
The test is simple. Could you support every figure on your tax return if HMRC asked? If yes, your records are adequate. If a number on the return has nothing behind it, that is the gap to close.
Income and expense records
Keep every sales invoice, letting statement, or till record, and a receipt or invoice for every expense you claim. Bank statements tie it together, but a statement line alone does not prove what a payment was for — the invoice behind it does.
HMRC accepts scanned and photographed copies for most records. You do not need to keep paper once a clear digital copy exists, so a scan-as-you-go habit beats a shoebox every time.
What landlords need on top
Rent received, letting agent statements, mortgage interest statements, repair and maintenance invoices, and deposit records. Keep mortgage interest separate from other costs — since Section 24, interest on residential lets gets a basic-rate tax credit rather than being deducted as an expense, so it needs its own line in your records.
If you sell a property, the purchase completion statement, improvement invoices, and selling costs feed the Capital Gains Tax calculation — sometimes decades after the purchase. Keep them for as long as you own the property, and then through the retention period after sale.
What happens if records are missing
HMRC can charge a penalty for failing to keep adequate records, and in an enquiry it can estimate your tax using its own judgement — which rarely lands in your favour. If something is lost, reconstruct it promptly: banks can reissue statements, and suppliers can reissue invoices.
Through Compliance Vault™, our clients' records are maintained year-round in the Evidence Pack — organised and audit-ready, not assembled in January.
Frequently asked questions
Do I need to keep paper copies of receipts?
No. HMRC accepts digital copies for most records — a clear scan or photo is fine. Keep the digital copies backed up, and keep any document you only hold in paper form until it is digitised.
Do bank statements count as proof of expenses?
Only partly. A statement shows a payment left your account, not what it was for. Keep the invoice or receipt behind each claimed expense — the statement and the invoice together are what satisfy an HMRC check.
What about cash income?
Record it at the time it is received — date, amount, and what it was for. Cash businesses attract more HMRC attention precisely because there is no bank trail, so a contemporaneous record matters more, not less.
Can I run business income through my personal account?
A sole trader can, legally, but it makes record keeping harder and enquiries slower. A limited company cannot treat company money as personal — a separate business account is essential, and mixing the two creates director's loan complications.