Bookkeeping basics online: the records HMRC expects, how long to keep them and what changed in 2026

What HMRC says you must record

GOV.UK's guidance for the self-employed says a sole trader or business partner must keep records of "all sales and income", "all business expenses", VAT records if registered, PAYE records if you employ people, and records of personal income. You do not send the records in with your tax return. You keep them so you can "work out your profit or loss for your tax return" and "show them to HM Revenue and Customs (HMRC) if asked".

The guidance also says what counts as proof: receipts for goods and stock, bank statements and chequebook stubs, sales invoices, till rolls and bank slips. Your records must be accurate and you must be able to identify business transactions.

Limited companies have their own rules. Section 386 of the Companies Act 2006 requires every company to keep adequate accounting records that show and explain its transactions and disclose its financial position with reasonable accuracy at any time.

Cash basis or traditional accounting

From the 2024 to 2025 tax year, GOV.UK says cash basis is the default accounting method for the self-employed: you record income when the money arrives and expenses when you pay them. You must opt out if you want traditional accounting, where income and expenses are recorded on the invoice date.

Traditional accounting means more records. GOV.UK lists what you need on top of the standard set: what you are owed but have not yet received, what you have committed to spend but not yet paid, the value of stock and work in progress at year end, year-end bank balances, how much you invested in the business in the year and how much you took out for your own use. A bookkeeping course explains both methods so you can choose the one that fits.

How long to keep records

GOV.UK is specific: "You must keep your records for at least 5 years after the 31 January submission deadline of the relevant tax year." Its example: a 2022 to 2023 return sent by 31 January 2024 means keeping the records until at least the end of January 2029. If records are lost, stolen or destroyed you must do your best to provide figures and tell HMRC whether they are estimated or provisional.

What changed in April 2026: Making Tax Digital for Income Tax

Making Tax Digital for Income Tax went live on 6 April 2026. GOV.UK says sole traders and landlords must use it if their annual income from self-employment and property is over £50,000. That means using software that works with Making Tax Digital to create, store and correct digital records, send quarterly updates to HMRC, and submit the tax return and pay by 31 January the following year. From September 2026 HMRC began signing up anyone whose 2024 to 2025 qualifying income was over £50,000 who had not already signed up.

VAT-registered businesses have kept digital VAT records and filed through compatible software under Making Tax Digital for VAT for some years. For many small businesses, Making Tax Digital for Income Tax is the point at which a shoebox of receipts stops being an option.

What an online bookkeeping basics course covers

A beginner's course should leave you able to keep a simple set of books properly. The Lift College Bookkeeping Basics course covers, in order:

• What bookkeeping is and what HMRC expects: the records to keep, how long for, and the three business types (sole trader, partnership, limited company).
• Business documents and the accounting equation: invoices, credit notes, receipts and remittance advices, and assets, liabilities and capital.
• Double entry in plain words: recording a sale, a purchase, a payment in and a payment out, and why the two sides balance.
• VAT for beginners: when a business must register, the UK rates, working out VAT on a price and recording it on sales and purchases.
• The bank and the cash book: keeping a cash book, matching it to the bank statement and finding the items that explain any difference.
• Bookkeeping software and Making Tax Digital: setting up a business in cloud software, bank feeds, reading a profit and loss report, and what the Making Tax Digital rules mean.

It is 6 hours of learning with a knowledge check after each module and a final test at 80%, with unlimited free retakes. Your CPD Standards Office accredited certificate (provider 51289) names Bookkeeping Basics, shows 6 hours of learning, your completion date and a refresh date 3 years on, and can be verified. It costs £19.99, pay once, with 14-day money back.

It is not a bookkeeping qualification. If you want the full method with tutor-marked sets of books, the next step is the Level 2 Bookkeeping Course.

Who it suits

• Sole traders and small business owners who want to keep their own books properly.
• Anyone asked to look after the books at work who has never been shown how.
• People considering bookkeeping as a job who want to try it before a longer course.
• Business owners about to register for VAT or move to Making Tax Digital.
• Anyone who wants to understand what their accountant needs at year end.

Where to go next

• Thinking about bookkeeping as a career? Read how to start a bookkeeping business in the UK and compare the best online bookkeeping courses.
• Handling customer data too? GDPR Training covers the everyday rules.
• Browse all business and finance courses.

Ready to start? See the Bookkeeping Basics course.