Track self-employed income and expenses for Self Assessment

By The Income Tracker · Updated 8 September 2026 · 7 min read

What HMRC expects you to keep

• A record of all sales and income, and all business expenses, with dates.
• Evidence: invoices, receipts, bank statements. Digital copies are fine.
• Records kept for at least five years after the 31 January submission deadline of the tax year they relate to.
• If you are in Making Tax Digital: digital records of each transaction's amount, date and category, kept in compatible software.

Deadlines for the 2025/26 tax year (6 April 2025 to 5 April 2026)

Payments on account catch people out in year two. If last year's bill was over £1,000 and mostly not collected at source, HMRC asks for half of it again in advance, twice a year. The tax pot is how you avoid the January shock.

The £1,000 trading allowance

If your gross trading income for the year is £1,000 or less you can use the trading allowance and do not need to report it. Above that, you register and file, and you choose between deducting the £1,000 allowance or your actual expenses, whichever is higher. The government has announced that the reporting threshold will rise to £3,000 within this Parliament, with a simpler online service for people between £1,000 and £3,000, but no start date has been confirmed, so plan on the £1,000 rule until GOV.UK says otherwise.

Making Tax Digital for Income Tax: who, and when

Qualifying income is your gross income (turnover, before expenses) from self-employment and property combined, judged on the tax return two years earlier. PAYE employment, dividends and pensions do not count towards it. If you are in, you keep digital records in HMRC-recognised software, send four quarterly updates a year (deadlines 7 August, 7 November, 7 February and 7 May) and still submit a year-end return through the software.

Be clear about what The Income Tracker is and is not. It is a free way to see your income, expenses and surplus month by month from a bank CSV, with categories that mirror the tax return headings. It is not MTD-recognised software and does not submit anything to HMRC. If you are inside MTD you will need recognised software for the submissions; the tracker still earns its place for the day-to-day picture, and the categorised export goes into whatever you file with.

A monthly routine that keeps January boring

1. On the first working day of the month, export last month from your business account as a CSV.
2. Import it. Categorise anything new under the Self Assessment headings; the app remembers each client and supplier afterwards.
3. Move your tax share of last month's income into the tax pot and log it.
4. Save the receipts for anything over a few pounds to one folder, named by date.
5. Glance at the year-to-date totals. Income, expenses, tax set aside. If the tax pot is short, fix it now, not in January.

Frequently asked questions

What records do I need to keep as a sole trader?

Dated records of all income and business expenses, with invoices, receipts and bank statements as evidence, kept for at least five years after the filing deadline. Inside Making Tax Digital, the records must be digital and kept in compatible software.

When is the Self Assessment deadline for 2025/26?

Online returns and payment are due by 31 January 2027. Paper returns by 31 October 2026. New filers must register by 5 October 2026.

Do I need Making Tax Digital software?

Only if your gross self-employed and property income is over the threshold: £50,000 from April 2026, £30,000 from April 2027 and £20,000 from April 2028. Below that, you file a normal Self Assessment return. The Income Tracker is not MTD software; it is for tracking, not submitting.

How much should I set aside for tax?

A fixed share of every payment, commonly 20 to 30 percent, adjusted once you have seen a real bill. Keep it in a separate pot and remember payments on account.

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