Business Record Keeping — What Records to Keep and How Long for a Trade Business (2026)

Why Record Keeping Matters

There are three big reasons to take record keeping seriously, and only one of them is about avoiding trouble.

• It's the law. HMRC requires you to keep records to support every figure on your Self Assessment or Corporation Tax return. If you can't evidence a number, HMRC can disallow it.
• It saves you tax. Poor records are the single most common reason trades overpay. If you lose the receipt for fuel, tools, materials or a van repair, you can't claim the expense — so you pay tax on income you actually spent on running the business.
• It runs your business. Good records tell you which jobs make money, who owes you, and whether you can afford that next van. They make an HMRC enquiry painless instead of terrifying, and they make selling or borrowing against the business far easier.

Put simply: bad records cost you money in missed expenses, expose you to penalties, and turn any HMRC query into a multi-day search through carrier bags of crumpled receipts. Good records do the opposite.

What Records to Keep

The exact list depends on your trade and structure, but almost every UK trade business needs to keep the following. The principle is simple: keep anything that evidences money coming in, money going out, or assets the business owns.

• Sales invoices and income records: every invoice you raise, plus records of cash jobs, card payments and any deposits taken. HMRC pays particular attention to undeclared cash work in the trades.
• Purchase invoices and receipts: materials, tools, fuel, PPE, subcontractor invoices, insurance, phone, software and anything else you claim as a business expense. No receipt, no claim.
• Bank and credit card statements: for every account the business uses. A separate business account makes this far cleaner.
• Mileage logs: if you claim the 45p / 25p simplified mileage rate, you need a record of business journeys (date, route, miles, purpose). If you claim actual van running costs instead, keep the fuel and maintenance receipts.
• VAT records: if you're VAT registered — VAT invoices issued and received, your VAT account, and returns submitted.
• Payroll and PAYE records: if you have staff — wages, deductions, payslips, P60s, P45s, P11Ds and your Real Time Information (RTI) submissions.
• CIS records: if you work under the Construction Industry Scheme — deductions suffered as a subcontractor, and deductions made and paid over if you're a contractor, plus monthly CIS returns and payment and deduction statements.
• Records of assets bought and sold: vans, plant, tools and equipment — purchase invoices, finance agreements and disposal records, needed for capital allowances and any capital gains.
• Grants and other income: business grants, interest, rental income from a yard, or anything else that isn't your normal trade income.

How Long to Keep Records

This is where the rules differ by business type, and where a lot of people get caught out. Keeping records for too short a period is a genuine compliance risk. Here are the current UK retention periods.

Sole Traders and Partnerships (Self Assessment)

If you complete a Self Assessment tax return, you must keep your records for at least 5 years after the 31 January submission deadline of the relevant tax year. So for the 2025/26 tax year, the deadline is 31 January 2027, and you must keep those records until at least 31 January 2032 — effectively the tax year plus close to six years. If HMRC has reason to suspect a problem, that window can extend further.

Limited Companies

A limited company must keep its records for at least 6 years from the end of the company's financial year they relate to. You may need to keep them longer in some cases — for example where an asset is expected to last more than six years, where a transaction spans more than one accounting period, where you filed your Company Tax Return late, or where HMRC has opened a compliance check. Company records also include statutory registers and director information, separate from the accounting records.

VAT

If you're VAT registered, you generally need to keep your VAT records for 6 years. Under Making Tax Digital these must be kept digitally (more on that below).

PAYE

Payroll and PAYE records should generally be kept for 3 years after the end of the tax year they relate to, in addition to the current year. Keeping them a little longer alongside your other business records is sensible and harmless.

Two overriding rules apply on top of all of the above: keep records longer if HMRC has opened an enquiry or compliance check (you must keep everything until it's resolved), and keep records relating to capital items — vans, plant, property — for as long as you own the asset plus the relevant retention period after you dispose of it.

Quick Reference: How Long to Keep Records

Digital Records and Making Tax Digital

You are allowed to keep most records digitally, and for a busy trade it's by far the easiest approach. Clear, readable scans or photos of paper receipts are acceptable to HMRC — you do not have to keep the original paper once you have a legible digital copy (with a few exceptions, such as documents showing tax that's been deducted but can't be reclaimed). The key word is readable: a blurry, half-faded photo of a receipt is not a record.

Making Tax Digital (MTD) is the bigger picture here. VAT-registered businesses are already required to keep digital records and file VAT returns through MTD-compatible software. MTD for Income Tax is being phased in for sole traders and landlords over the income thresholds, which means digital record keeping and quarterly updates rather than one annual return. Even if your turnover sits below the current threshold, getting your bookkeeping onto software now means you're ready when MTD reaches you — and you get cleaner records in the meantime.

Practical Tips for Trades

The businesses with the best records aren't the most disciplined — they just have a simple system that captures everything as it happens. A few habits make all the difference:

• Open a separate business bank account. Mixing personal and business spending is the number one cause of messy records and missed expenses. A dedicated account makes reconciliation simple and is near-essential for a limited company.
• Capture receipts as you go. Photograph or scan every receipt the moment you get it — at the merchant's counter, in the van, before it ends up as a ball of paper in the footwell. Most bookkeeping apps let you snap and attach a receipt in seconds.
• Reconcile regularly. Match your bank transactions to invoices and receipts weekly or monthly, not once a year. Small and often beats one painful annual marathon.
• Back up your digital records. If everything lives on one phone, you're one dropped handset away from a problem. Use cloud-based software or keep a backup.
• Keep it simple. A system you actually use beats a perfect system you abandon by March. Pick one tool, one process, and stick to it.

Penalties for Poor Records

HMRC can charge penalties for failing to keep adequate records — this is separate from any penalty for getting the tax wrong. More commonly, weak records hurt you indirectly: in an enquiry, if you can't evidence an expense, HMRC disallows it and you pay more tax, plus interest and potentially a penalty on the underpayment. Inadequate records can also push a penalty into a higher bracket if HMRC decides your behaviour was careless rather than an honest mistake. The cost of good bookkeeping is tiny next to the cost of any of this.

The Bottom Line

Good record keeping is the foundation everything else sits on — your tax return, your VAT, your MTD obligations, your understanding of whether the business is actually making money. Decide on a simple digital system, capture everything as it happens, keep records for the right length of time for your business type, and you'll never dread an HMRC letter again. Pair solid day-to-day bookkeeping with awareness of how Making Tax Digital affects you, and you're in good shape for 2026 and beyond.

This article is general information, not tax advice. Rules and thresholds change, and your situation may differ — speak to a qualified accountant or tax adviser before making decisions about your own record keeping and tax affairs.