UK sole trader guide
How to keep sole trader records without rebuilding the year in January
Record each sale and cost while the evidence is available, reconcile the totals regularly and keep the tax-year summary separate from the documents that support it.
Capture
Record income and costs with dates, categories and payment methods.
Evidence
Keep invoices, receipts and statements behind the figures.
Reconcile
Match the record to bank and payment-provider activity.
Review
Check the year-to-date totals before the return is due.
Start with the records HMRC expects
HMRC says sole traders must keep records of business income and expenses for Self Assessment, as well as records of personal income. The working record should show what happened; the receipt, invoice or statement should support it.
Money coming in
Record sales, fees, commissions, refunds and other business income. Keep the invoice, platform report or other evidence that explains the amount.
Money going out
Record business costs using categories that remain consistent through the year. Keep the receipt or supplier invoice and note any personal element.
Journeys and vehicles
For business mileage, record the date, purpose, start and destination, distance and vehicle. Keep the log with the rest of the tax-year evidence.
Other income
Keep the information needed for other parts of Self Assessment, even when it does not belong in the sole-trader profit calculation.
Choose the accounting basis before categorising the year
HMRC states that cash basis is the default from the 2024 to 2025 tax year unless a business opts out or cannot use it. Cash basis normally records money when it is received or paid. Traditional accounting records income and costs when invoiced or billed. Check which basis applies before deciding the date used for each entry.
Use a monthly close instead of a January reconstruction
- Import or enter every transaction for the month.
- Match the total against business bank and payment-provider activity.
- Attach or file the missing evidence.
- Review uncategorised items, refunds and personal spending.
- Back up the records and note anything an accountant needs to review.
A short quarterly review can then check turnover, costs, profit, tax set-aside and missing documents without repeating the monthly work.
Keep records for the full retention period
HMRC says Self Assessment records must normally be kept for at least five years after the 31 January submission deadline for the relevant tax year. Very late returns and lost records have separate rules, so check the current guidance rather than calculating an unusual deadline from this page.
Check whether Making Tax Digital applies
Making Tax Digital for Income Tax is being introduced in stages. Current HMRC guidance says it applies from 6 April 2026 where qualifying self-employment and property income for 2024 to 2025 was over £50,000, with later phases for lower thresholds. If it applies, compatible software is required for digital records and quarterly updates.
Choose the tool around the stage of work
UK Sole Trader Ledger
Keep income, expenses, quarters and a tax-year summary in one offline record.
View Sole Trader LedgerSelf Assessment Companion
Bring figures from employment, self-employment, property and other sources into one return organiser.
View Self Assessment CompanionUK Mileage Tracker
Keep the journey evidence and vehicle totals separate from the main ledger.
View Mileage TrackerCompare the work tools
Choose between side-income, records, invoicing and specialist-work products.
See self-employed tools