Records and the tax pot
Lesson 11 of 13 in our free Business Money Basics guide: a 5-minute money game with the key points below.
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Questions you'll answer
Illustration (England, 2026/27): Mo is a sole trader with £30,000 profit and no other income. Roughly how much Income Tax plus Class 4 NI should be in his tax pot?
Quick facts
- Red flag: “Please note our bank details have changed.” — Changed bank details by email is the classic invoice-redirection fraud. Call the supplier on a number you already have.
- Red flag: “Pay invoice 2231 to the new account below by end of day,” — Pressure to pay fast stops you checking.
- Red flag: “and please don't call the office as the phones are down.” — Blocking you from checking is a huge red flag.
- Fact: “Mixing business and personal spending in one account makes your tax return harder to get right.” — A separate account makes records cleaner. It doesn't have to be a special business product for a sole trader.
- Myth: “If you lose a receipt, the cost simply doesn't count for anything.” — Other evidence (bank statements, invoices, emails) can back it up. But keep receipts: it's much easier.
- Fact: “The tax on this year's profit is usually paid months after you earned it.” — That's why the money has to be set aside as it comes in, not found in a panic in January.