Sole trader bookkeeping spreadsheet (UK, 2026/27): what to record and how to set it up

Plenty of UK sole traders keep their books in a spreadsheet, and for a simple business it can work well. You see every number, it costs little or nothing, and there's no monthly subscription. But a spreadsheet only helps at tax-return time if it records the right things in the right shape. This guide covers what HMRC expects and how to set up (or choose) a spreadsheet that does the job.

What records HMRC expects

According to gov.uk, if you're self-employed you need to keep records of:

• all sales and income
• all business expenses
• VAT records, if you're VAT-registered
• PAYE records, if you employ people
• records about your personal income

You also need to keep proof: receipts for goods and stock, bank statements, sales invoices, till rolls and similar. You don't send your records with your tax return, but they must be accurate, you must be able to identify business transactions, and you have to show them to HMRC if asked.

How long to keep them

Keep your records for at least 5 years after the 31 January submission deadline of the relevant tax year. For the 2026/27 tax year (6 April 2026 to 5 April 2027), the online return deadline is 31 January 2028, so keep those records until at least the end of January 2033. (Source: gov.uk.)

Cash basis is the default

For sole traders, cash basis is now the standard way to record income and expenses. You record money when it actually comes in or goes out, not when you invoice or get billed. You can choose traditional (accruals) accounting instead, which needs extra records like money owed to you, unpaid bills and stock values. For most small sole traders, a cash-basis spreadsheet is the natural fit.

The expense categories that matter: SA103

On your Self Assessment return, self-employment expenses go on the SA103 pages, split into categories. If your spreadsheet uses the same categories from day one, the year-end totals drop straight into the return. The main categories on the full SA103 are:

• Cost of goods bought for resale or goods used
• Construction industry payments to subcontractors
• Wages, salaries and other staff costs
• Car, van and travel expenses
• Rent, rates, power and insurance costs
• Repairs and maintenance of property and equipment
• Phone, fax, stationery and other office costs
• Advertising and business entertainment costs (entertainment itself isn't allowable)
• Interest on bank and other loans
• Bank, credit card and other financial charges
• Irrecoverable debts written off
• Accountancy, legal and other professional fees
• Depreciation and loss or profit on sale of assets (not allowable; capital allowances are claimed separately)
• Other business expenses

Smaller businesses can usually use the short version (SA103S), which asks only for total expenses if turnover is below the VAT registration threshold. The categories are still the best way to organise your records, because Making Tax Digital quarterly updates use the same categories as Self Assessment.

What a good spreadsheet should include

1. An income log

Date, customer or source, description, amount and invoice reference. One row per payment received.

2. An expense log with categories

Date, supplier, description, category (as a dropdown, so spellings stay consistent), amount and a "receipt kept?" column. A business-use % column is useful for mixed costs like a phone used partly for personal calls. The allowable amount is the cost times the business share.

3. A mileage log

If you use simplified expenses for a car or van, log every business journey: date, from, to, purpose and miles. For 2026/27, HMRC's flat rates for cars and goods vehicles are 55p per mile for the first 10,000 business miles and 25p after that. Motorcycles are 24p. (Source: gov.uk.) If you use the flat rate for a vehicle, you can't also claim its actual running costs. Our 2026/27 mileage rate guide has worked examples.

4. A summary that mirrors the return

Totals per category, total income, total allowable expenses and net profit. It's also handy to compare against the £1,000 trading allowance, which you can use instead of claiming expenses if your costs are very low (it can't create a loss).

5. Quarterly totals

Even if Making Tax Digital doesn't apply to you yet, quarterly totals help you budget for tax and get you ready for when it does. MTD updates are cumulative from 6 April, so year-to-date totals per quarter are the useful format. See our guide to MTD with a spreadsheet.

6. A rough tax estimate

A simple estimate of income tax and Class 4 National Insurance on your profit helps you put money aside through the year. Treat it as a guide, not a tax calculation, especially if you have other income, student loans or payments on account. For a rule-of-thumb approach, see how much tax to set aside.

Habits that keep it painless

• Use a separate bank account for business transactions if you can. It makes the records much easier to check.
• Record weekly, not in January. Ten minutes a week beats a weekend of shoeboxes.
• Photograph receipts as you get them and note the receipt reference in your log.
• Reconcile monthly: check your logged income and expenses against the bank statement.
• Keep a backup in cloud storage, so you still have the 5+ years of records if a laptop dies.

When a spreadsheet stops being enough

If you have lots of transactions, stock, staff or VAT, or you'll soon need to send quarterly MTD updates, accounting software or an accountant may save time. Spreadsheets remain an option under MTD, but only with bridging software. Our MTD spreadsheet guide explains how that works.

General information, not tax advice. Figures are for the 2026/27 tax year (England, Wales and Northern Ireland) and were checked against gov.uk on 15 October 2026. Rates change each April; check gov.uk or an accountant before you file or pay.