Keeping Digital Records for Tax Purposes

What must be kept

Sales records: invoices issued, till records, and evidence of income received.

Purchase records: supplier invoices and receipts for anything claimed as an expense.

Bank statements for accounts used by the business.

Records supporting any specific claims — mileage logs, home office calculations, asset purchases and disposals.

Payroll records where staff are employed.

Digital capture

Photographing or scanning receipts is generally acceptable provided the image is legible and complete, including any information on the reverse.

This matters because thermal receipts fade, sometimes within months. Capturing them promptly is not optional if the paper is the only record.

Accounting software with receipt capture attaches the image to the transaction, which is the most reliable approach and removes the shoebox entirely.

Retention periods

Vary by jurisdiction and by entity type, commonly several years after the filing deadline for the relevant period, and longer for companies than for individuals in some systems.

Longer retention applies where returns were filed late or are under enquiry.

Records supporting the cost of assets should be kept until the asset is disposed of plus the retention period, which can be decades for property.

Making it sustainable

Capture as you go rather than in an annual push. A photograph at the point of purchase takes seconds and reconstruction later takes days.

Use a separate business bank account, which is the single change that most reduces bookkeeping effort.

Reconcile monthly. Errors are traceable while recent and become archaeology after a year.

Record the business purpose alongside each expense, which is what supports the deduction if queried.

Backup

Cloud accounting providers hold your data and are not a backup of it in the sense of protecting against your own errors or an account problem.

Export a full backup periodically and store it separately.

Confirm you can export in a usable format before committing to any platform, and confirm what happens to your data if you stop subscribing — access frequently ends with the subscription while the retention obligation continues.