Which expense receipts do you need to keep?

Financial paperwork… It might not be the most rock’n’roll part of your business, but it’s something you can’t afford to neglect. If you’re not sure which receipts you need to keep and how long you should keep them for, here’s a quick reminder.

First off, what is a business expense?

An expense is a type of business cost. The word ‘expenses’ describes several different types of cost, but usually indicates that the cost can be reimbursed in some way.

Do I really have to keep a whole lot of paper receipts for all my business expenses?

No, you don’t! If you’re self-employed, HMRC does require you to keep hold of your business’s receipts as part of your business records, but you don’t have to keep physical copies. If you prefer, you can just keep a digital copy of the receipt on your computer or through your accounting software to save you rummaging through your paperwork later. Just make sure you capture all of the key information on the receipt when scanning it.

It’s worth noting, you don’t have to include the receipts themselves when you file your tax return.

If you’re unsure about what records you should be keeping for your business, your accountant should be able to help.

If I don’t submit receipts with my tax return, why do I have to keep them?

It’s a requirement from HMRC. A tax inspector can ask to see your receipts to ensure you’re paying the correct amount. But keeping these receipts will also help you (and your accountant if you are working with one) fill in your tax return accurately and confidently each year.

Alright, so which receipts should I be keeping?

You’ll need to keep a receipt for anything you expect to reclaim as an ‘allowable expense’ when filing your tax return. 

An allowable expense is any expense HMRC allows you to deduct when working out your taxable profit. If you’re a sole trader or partner in a partnership, you can deduct allowable expenses from your business income when working out how much taxable profit your business made during an accounting period (such as a tax year or your business’s accounting year). 

Allowable expenses include a variety of business-related costs that may be incurred over the course of an accounting period. These include:

• certain office costs (including premises costs, such as heating)
• certain travel costs (if the journey was primarily for business)
• certain staff costs (such as salaries or subcontractor costs - but note that this does not include anything you take out as a self-employed individual)
• certain clothing expenses (such as uniforms)
• certain financial costs (such as business insurance)

HMRC provides a full list of allowable expenses for the self-employed on its website.

You should also keep records for any capital assets you have purchased, for as long as you have the asset and for at least six years after you sell it.

And how long should I keep them?

HMRC requires you to keep financial records for your business for at least five years after the 31st January submission deadline of the relevant tax year. While you don’t have to include your receipts with the tax return that you submit to HMRC, you must hold on to the receipt for at least five years in case of a tax inspection.

Though, as we’ve said - these don’t need to be huge piles of crumpled paper. They can be stored in digital format on your computer or through accounting software.

Is there any way to make this less hassle? 

There absolutely is. From regular bills to just grabbing a coffee on the go, FreeAgent can help you stay on top of all the costs you incur while running your small business.

You can track bank payments and out-of-pocket expenses on your laptop or even your phone, so it’s easy to remember to capture all the incidental spending that can add up. You can even snap photos or upload files of receipts and the key info will be automatically extracted and added to your accounts. Try a 30-day free trial of FreeAgent to see for yourself.

Originally published 4 August 2021
Last updated 3 February 2025