What Sole Traders Actually Need to Keep: MTD Records in Plain English

The Question Everyone Asks: Do I Need the Actual Receipt?

If you've been stuffing paper receipts into a drawer or forwarding invoices to a random email folder, you're not alone. Most sole traders filing their own MTD quarterly updates hit the same wall: what do I actually need to keep, and what's good enough if something's missing? This post answers that directly, with concrete examples - printer paper, mileage, software subscriptions - so you know exactly where you stand before organising your Q2 records.

What HMRC Actually Expects from Sole Traders

HMRC's position is that you must keep records that are accurate, complete, and able to support the figures you report. That's the official line. In practice, what this means for a sole trader is simpler than it sounds.

You are not required to keep original paper receipts. HMRC accepts digital copies - photographs, scans, PDFs - as equivalent to originals. The key requirement is that the copy is legible and shows the relevant details.

For each business transaction, HMRC wants to be able to see:

• The date of the transaction
• What was bought or sold
• The amount paid or received
• Who it was paid to or received from (supplier or customer name)

That's it. HMRC does not require you to keep detailed contracts, lengthy correspondence, or elaborate paperwork for ordinary day-to-day expenses. See also our post on what counts as records for MTD for the broader picture.

The Bank Statement Question - Answered Plainly

Here's the most common friction point: Is a bank statement enough, or do I need the original receipt?

The honest answer is: it depends on what the transaction looks like on your statement.

A bank statement on its own is usually not enough to support an expense claim, because it typically only shows the merchant name and the amount. It doesn't tell HMRC what you actually bought. If your statement shows "Amazon £34.99," that could be anything - stationery, a personal purchase, a gift. Without something else to support it, HMRC cannot verify it was a business expense.

However, a bank statement combined with other evidence can be perfectly adequate. For example:

• Bank statement showing "Adobe £19.99/month" plus a screenshot of your Adobe subscription confirmation is solid evidence
• Bank statement showing "Ryman £12.40" plus a photo of the receipt (even a blurry till receipt) showing printer paper and pens is fine
• Bank statement showing a direct debit to a known business supplier where the product or service is obvious from context (for example, a named broadband provider) is generally acceptable

The golden rule: if the nature of the purchase is not obvious from the bank entry alone, keep something else alongside it. A photo of the receipt is the easiest option. A screenshot of the order confirmation email works just as well.

What to Keep for Common Sole Trader Expenses

Office Supplies (Printer Paper, Ink, Stationery)

A photo of the till receipt or a scanned copy is ideal. If you've lost the receipt but paid by card, keep your bank statement and note what you bought in your records at the time - a quick note in a spreadsheet saying "Ryman 14 July - printer paper and pens" alongside the bank entry is far better than nothing. Courts and HMRC enquiries rely on contemporaneous records - notes made at the time carry more weight than explanations given years later.

Software Subscriptions

These are easy to document. Keep the original subscription confirmation email (or a PDF of it) and your bank statements showing the payments. If the software is purely for your business - accounting tools, design software, project management apps - there's no ambiguity about business use, so you don't need elaborate justification beyond the basic transaction details.

If you're unsure whether a software cost qualifies as an allowable expense, our post on self-employed business expenses in MTD covers this in detail.

Mileage

Mileage is different from other expenses because there's usually no receipt at all. Most sole traders use HMRC's simplified mileage rates (currently 55p per mile for the first 10,000 business miles in a tax year, 25p per mile after that) rather than claiming actual vehicle costs. If you use the simplified rates, you do not need fuel receipts.

What you do need is a mileage log. This records:

• The date of each business journey
• The start and end point (or a general description, such as "home to client site in Bristol")
• The purpose of the journey
• The number of miles driven

A simple spreadsheet is enough. Some people use a notebook in their car. There are also mileage tracking apps. The format doesn't matter - what matters is that the log exists and is kept up to date. Our post on mileage allowances for MTD explains the rates and how to claim them in more detail.

Business Meals and Entertaining

Keep receipts. HMRC is sceptical of meal claims without evidence, and the rules on what qualifies as a business meal are quite narrow - entertaining clients is generally not an allowable expense. Keep the receipt and note who was present and the business purpose. If you're unsure whether a particular meal qualifies, see our post on grey-area MTD expenses.

Professional Services (Accountant Fees, Legal Advice)

Keep the invoice. Professional service invoices usually contain all the detail HMRC needs: the date, the service description, the amount, and the supplier's name and address. These are typically formal documents so there's rarely a problem here.

Home Working Costs

If you work from home and claim a proportion of household costs (broadband, heating, electricity), keep your utility bills or statements. You'll also need to record your calculation showing how you worked out the business proportion - for example, number of rooms used for work, hours worked, or use of the HMRC flat rate.

If you use HMRC's simplified flat rate for home working, no household bills are required - the flat rate replaces actual costs. You just need to record how many hours per month you worked from home.

Income Records: What Sole Traders Must Keep

Record-keeping isn't just about expenses. You also need to keep records of your income - everything you received from customers or clients during the quarter.

For each payment received, you should be able to show:

• The date you received it
• The amount
• Who paid you
• What it was for

If you raise invoices, keep copies of every invoice you issue. If you don't raise formal invoices (for example, if customers pay you in cash or via a payment platform), your bank statements and payment platform records (PayPal history, Stripe dashboard exports) serve as your income record.

Cash income is one area where HMRC pays close attention. If you receive cash payments, record each one at the time - a simple cash book or spreadsheet entry is sufficient. Do not rely on memory. Our post on calculating quarterly update numbers from bank statements explains how to turn raw transaction data into the figures you report to HMRC.

What Format Does HMRC Accept?

HMRC accepts digital records. You do not need to keep paper originals if you have a clear digital copy. Acceptable formats include:

• Photographs of paper receipts taken on your phone
• Scanned PDFs of invoices and receipts
• Screenshots of online orders, subscription confirmations, or digital invoices
• Exported CSV or PDF files from payment platforms or bank accounts
• Email attachments (PDFs of invoices sent by suppliers)

The image or file just needs to be legible and contain the required details. A slightly blurry photo of a till receipt is better than no receipt at all, as long as the key information is readable.

For an overview of how to store these records in a way that's easy to retrieve later, see our post on MTD records storage.

What You Can Safely Discard

Not everything needs to be kept. Here's what you can safely get rid of:

• Duplicate copies of the same document - if you have both the paper original and a clear digital photo, you can discard the paper
• Packaging and delivery notes for purchases where you already have the receipt or invoice
• Draft invoices that were never sent or never paid
• Promotional emails and marketing materials from suppliers
• Bank statements for personal accounts that have no business transactions on them
• Receipts for personal purchases made from a personal account with no business element

The question to ask is: if HMRC asked me to prove this figure in my quarterly update, could I show them what they need? If the answer is yes without a particular document, you probably don't need to keep it.

How Long Do You Need to Keep These Records?

HMRC requires sole traders to keep MTD records for at least five years after the 31 January submission deadline for the relevant tax year. In practice, this means most records from the 2026-27 tax year need to be kept until at least 31 January 2033.

This applies to both income records and expense records. Don't clear out your records just because you've filed - the quarterly update is not the end of the road. Our post on how long to keep MTD records covers the retention rules in full.

What Happens if a Receipt Is Missing?

Realistically, receipts go missing. If you've lost a receipt for a genuine business purchase, you have a few options:

1. Contact the supplier - many businesses can reissue receipts or invoices, especially if you paid by card or ordered online
2. Use your bank statement as corroborating evidence alongside any other information you have (an order confirmation email, a note made at the time)
3. Make a contemporaneous note - a brief written record explaining what was purchased, for what business purpose, and on what date, saved alongside your bank statement, is better than no documentation at all

If a receipt is genuinely unrecoverable and the amount is small, HMRC is unlikely to challenge it in isolation during an enquiry. But if you have a pattern of missing documentation, that's where problems arise. Our post on late receipts and missing invoices covers what to do when documents arrive after you've already filed.

Organising Records for Q2 Now

If you're currently pulling together records for your Q2 quarterly update, the practical approach is to work through your bank statements transaction by transaction and make sure you can match a supporting document to each business transaction. For anything you can't match, decide now whether you can get the documentation or whether you need to make a note of what it was.

Doing this in real time - or at least once a week - is far less painful than doing it all at once before a deadline. Our post on a 15-minute-a-week record-keeping system gives a simple structure for staying on top of this through the quarter. And if you're still untangling Q1 records, our guide to preparing for Q3 after Q2 filing walks through the handover process.

A Quick Summary

You don't need to keep original paper receipts - clear digital copies are fine. A bank statement alone is usually not enough; pair it with something that shows what you actually bought. Mileage needs a log, not fuel receipts (if you use the simplified rate). Software subscriptions need one good piece of evidence plus your bank statements. Income records need to cover every payment received. Keep records for five years after filing. And photograph thermal receipts quickly, before they fade.

If you're a sole trader filing your own MTD quarterly updates without an accountant, getting your record-keeping right now saves a lot of stress later - both at the next deadline and if HMRC ever asks questions. For a broader look at what HMRC can ask for and when, see our guide on records sole traders must keep for MTD enquiries.