Receipts and invoices are a vital part of record-keeping for your tax return. This paperwork is proof that the purchase passes the ‘wholly and exclusively for business purposes’ test for HMRC (Expenses if you’re self employed).
A receipt (or invoice) should include the date of purchase and a description of the goods or services purchased.
Digital Storage
Physical receipts and invoices should be stored securely. An HMRC investigation can go back several year. Therefore, it is good practice to make a digital copy of such paperwork for two reasons. Firstly, ink can fade. This is particularly true of receipts issued from stores. Even when kept in a drawer, the receipt can become unreadable within a short time frame. Having a digital copy, protects the original information. Secondly, paperwork is easy to lose and by creating a digital copy you can store it securely and most storage platforms will allow for documents to be searched. Thirdly, it is easy to damage physical pieces of paper. Again, creating a digital copy can preserve the original information.
You can either scan your receipt or take a photo of it. Either process will typically create an image file (usually either .jpg or .png). You can store the image file or save it as a PDF. PDFs are generally smaller to store than an image file.
Storing financial paperwork
A common feature of finance software is to allow users to attach receipt files to transactions. This can be a great way to store your receipts. Alternatively, you can create a folder structure on your computer / cloud storage. I would suggest the following structure:
- 2104 – Apr 2021
- 2105 – May 2021
- 2106 – Jun 2021
- 2107 – Jul 2021
- 2108 – Aug 2021
- 2109 – Sep 2021
- 2110 – Oct 2021
- 2111 – Nov 2021
- 2112 – Dec 2021
- 2201 – Jan 2022
- 2202 – Feb 2022
- 2203 – Mar 2022
Having a folder for each month allows you to store your receipts and invoices sequentially and safely.