What HMRC actually expects you to keep

If you're self-employed, HMRC expects you to keep records of all your sales and income — invoices, till receipts, and bank statements showing money coming in — alongside records of every business expense you claim, backed up by a receipt or invoice. This last point matters more than people realise. A bank statement showing a payment isn't enough on its own; a tribunal case in 2023 confirmed that HMRC can reject an expense claim if you can't produce the underlying receipt, even when the transaction clearly shows on your statement. So the rule of thumb is simple: if you're claiming it, you need to be able to prove it.

For landlords, the same principle applies to rental income and allowable expenses. For limited company directors, there's the added layer of statutory accounting records and Companies House requirements on top of what HMRC needs.

How long you need to keep everything

This is where people often get caught out, because the answer depends on your situation.

If you're self-employed or a landlord, the standard rule is to keep your records for at least five years after the 31 January submission deadline for the relevant tax year. So if you file your 2025/26 return by 31 January 2027, those records need to stick around until at least 31 January 2032. If you're not self-employed but still complete a Self Assessment return, the period is shorter — generally 22 months after the end of the tax year, though this changes if you file late.

Limited companies have their own rule: records need to be kept for six years from the end of the financial year they relate to, and sometimes longer if they involve assets that last beyond that, or if HMRC has opened a compliance check.

It's worth saying that these are minimums, not targets. Many businesses choose to hold onto records for longer than the law requires, simply because it's one less thing to worry about if a question comes up further down the line.

What happens if your records aren't up to scratch

HMRC can issue a penalty of up to £3,000 for each failure to keep adequate records, though in practice the more common outcome is that expense claims get denied during a compliance check — which can mean extra tax, interest, and further penalties on top. It's a good reminder that record keeping isn't really about satisfying a rulebook; it's about being able to stand behind the figures on your return if you're ever asked to.

Digital records and Making Tax Digital

From April 2026, this whole area has an extra layer to it. Making Tax Digital for Income Tax now applies to sole traders and landlords whose combined gross income from self-employment and property was over £50,000 in the 2024/25 tax year, and it requires transaction data — the date, the amount, and what it was for — to be recorded digitally rather than kept purely on paper.

A common misconception is that this means scanning every single receipt. It doesn't. What has to be digital is the transaction record itself, entered into compatible software. The paper receipt can stay in a drawer, provided the details behind it have been recorded properly. That said, since you still need to hold onto the underlying receipts for compliance purposes anyway, keeping digital copies of everything tends to be the most practical way to stay organised — and it saves you hunting through old paperwork if HMRC ever asks a question about something from a few years back.

Making it easier on yourself

None of this needs to be complicated once you've got a system in place. A separate business bank account, receipts filed or photographed as soon as you get them, and cloud accounting software doing the heavy lifting in the background will cover most of what HMRC expects, and take the pressure off when tax return season comes around.

If you're not sure what you should be keeping, for how long, or whether Making Tax Digital applies to you, that's exactly the kind of thing we help clients get straight — so it's one less thing on your plate.