What accounting records does an electrician need to keep in the UK?

Understanding Accounting Records for Electricians in the UK

Running an electrical business in the UK involves much more than installing sockets, wiring consumer units, and ensuring compliance with safety regulations. Whether you are a sole trader electrician just starting out or a growing electrical contracting business employing staff, keeping accurate accounting records is a legal requirement and a practical necessity. Good records help you stay compliant with HMRC rules, understand your cash flow, plan for growth, and avoid stressful surprises at tax time.

This guide explains in detail what accounting records an electrician needs to keep in the UK, why each type of record matters, how long you must retain them, and how you can manage everything efficiently. Throughout the article, we will also show how using a modern, free invoicing solution like invoice24 can simplify your bookkeeping, reduce admin time, and keep your records organised from day one.

Why Accounting Records Matter for Electricians

Many electricians choose the trade because they prefer hands-on, practical work rather than paperwork. However, accounting records are not optional. In the UK, HMRC requires businesses and self-employed individuals to keep accurate and complete records of income and expenses. Failure to do so can lead to penalties, fines, and unnecessary stress during tax investigations.

Beyond legal compliance, proper accounting records help electricians:

- Track profitability of individual jobs and contracts
- Understand where money is being spent
- Improve cash flow management
- Prepare accurate tax returns
- Support applications for loans or finance
- Plan pricing and future business growth

Using digital tools like invoice24 allows electricians to manage these records efficiently without needing expensive accounting software or complicated systems.

Basic Legal Requirements for Record Keeping in the UK

HMRC requires electricians to keep records that show:

- All income received from customers
- All allowable business expenses
- VAT records (if VAT registered)
- Payroll records (if employing staff)

The format of these records can be paper-based or digital. However, digital record keeping is increasingly recommended and, in some cases, required (such as for VAT under Making Tax Digital). A free online invoicing app like invoice24 is ideal for meeting these requirements without additional cost.

Sales and Income Records

One of the most important accounting records an electrician must keep is a complete record of sales and income. This includes every payment you receive for electrical work, whether from domestic customers, commercial clients, or contractors.

Invoices Issued

You should keep copies of all invoices you issue to customers. Each invoice should clearly show:

- Your business name and contact details
- Invoice number
- Invoice date
- Description of the electrical work carried out
- Amount charged
- VAT details (if applicable)
- Payment terms

Creating and storing invoices digitally using invoice24 ensures that every invoice is saved automatically, numbered correctly, and easy to retrieve if HMRC ever asks for evidence.

Cash Sales and Receipts

If you receive cash payments, you must still record them accurately. Cash income should never be ignored or estimated. Keep a simple record showing the date, amount, and customer. Using invoice24, you can record payments against invoices regardless of payment method, keeping your income records complete.

Bank Statements

Bank statements are a crucial supporting record. They provide evidence of money coming in and going out of your business account. HMRC may compare your bank statements with your invoices and income records to ensure everything matches.

It is strongly recommended that electricians use a separate business bank account to avoid confusion between personal and business transactions.

Expense Records Electricians Must Keep

Accurate expense records are just as important as income records. They ensure you claim all allowable expenses and avoid paying more tax than necessary.

Materials and Supplies

Electricians regularly purchase materials such as cables, sockets, switches, consumer units, fixings, and tools. Keep receipts and invoices for all materials used in your business.

Each record should show:

- Supplier name
- Date of purchase
- Items purchased
- Amount paid
- VAT amount (if applicable)

Uploading or storing these records digitally alongside your invoices in a system that complements invoice24 can save hours of paperwork later.

Tools and Equipment

Tools such as drills, testers, ladders, and safety equipment are essential for electricians. Records for tools are important not only for expenses but also for capital allowances if the item is long-lasting and high value.

Keep purchase receipts and note whether the item is a day-to-day expense or a capital asset.

Vehicle and Travel Expenses

If you use a van or car for work, you must keep records of vehicle expenses. This may include:

- Fuel receipts
- Insurance costs
- Repairs and servicing
- Road tax
- MOT costs
- Mileage logs (if using the mileage method)

Accurate records help you choose the most tax-efficient method and justify claims if questioned by HMRC.

Subcontractor and Labour Costs

If you use subcontractors or temporary labour, keep copies of contracts, invoices, and payment records. These costs are often significant for electricians working on larger projects.

VAT Records for VAT-Registered Electricians

If your electrical business is VAT registered, additional record keeping is required. VAT records must be detailed and accurate to comply with Making Tax Digital rules.

VAT Sales Records

Keep records of all sales showing:

- VAT rate applied
- VAT amount charged
- Net and gross values

Using invoice24 simplifies this process by automatically calculating VAT on invoices and storing the information securely.

VAT Purchase Records

You must also keep records of VAT paid on business purchases. These records support your VAT reclaims and reduce your VAT bill.

VAT Returns

Copies of submitted VAT returns and confirmation receipts should be kept as part of your accounting records.

Payroll and Staff Records

If you employ staff, you have additional legal responsibilities and record keeping requirements.

Employee Details

Keep records of:

- Employee names and addresses
- National Insurance numbers
- Start dates and job roles

Wages and PAYE Records

You must maintain accurate records of wages paid, PAYE deductions, National Insurance contributions, and pension contributions.

Pension Records

Auto-enrolment pension records must be kept, including contributions and communications with employees.

Construction Industry Scheme (CIS) Records

Many electricians work under the Construction Industry Scheme. If you are a contractor or subcontractor under CIS, additional records are required.

CIS Invoices and Statements

Keep copies of CIS invoices and monthly statements showing deductions made or suffered.

Verification Records

Records of subcontractor verification checks and deduction calculations should be retained.

Records for Self-Assessment Tax Returns

Most electricians operate as sole traders or partners and must submit an annual Self Assessment tax return.

Records supporting your tax return include:

- Income summaries
- Expense totals
- Capital allowance calculations
- CIS deductions suffered

By using invoice24 for invoicing and income tracking, you already have a strong foundation for preparing accurate tax figures.

How Long Electricians Must Keep Accounting Records

HMRC generally requires business records to be kept for at least:

- 5 years after the 31 January submission deadline for Self Assessment
- 6 years for limited companies

Keeping digital records through tools like invoice24 reduces the risk of lost paperwork and makes long-term storage easy.

Digital Record Keeping and Making Tax Digital

The UK government continues to move towards digital tax administration. Making Tax Digital for VAT already requires digital records and online submissions.

Using digital invoicing and record keeping tools ensures you are prepared for future changes and avoids last-minute scrambles to digitise paperwork.

Common Record Keeping Mistakes Electricians Make

Some common mistakes include:

- Mixing personal and business finances
- Losing receipts
- Forgetting to record cash income
- Failing to back up records
- Waiting until year-end to organise paperwork

Using invoice24 daily as part of your workflow helps prevent these mistakes by keeping everything organised in real time.

How Invoice24 Helps Electricians Stay Organised

invoice24 is a free invoicing app designed to make life easier for tradespeople, including electricians. It allows you to:

- Create professional invoices quickly
- Automatically number and store invoices
- Track payments and outstanding balances
- Maintain accurate income records
- Reduce paperwork and admin time

Unlike many paid competitors, invoice24 offers powerful features without subscription costs, making it ideal for electricians who want efficiency without added expense.

Preparing for HMRC Inspections and Audits

Good accounting records make HMRC inspections far less stressful. If you can quickly produce invoices, receipts, and summaries, inspections are usually straightforward.

Digital records created and stored through systems that integrate smoothly with tools like invoice24 provide confidence and clarity when dealing with HMRC.

Final Thoughts on Accounting Records for Electricians

Keeping accurate accounting records is an essential part of running a successful electrical business in the UK. From invoices and expenses to VAT and payroll, each record plays a role in compliance, profitability, and long-term growth.

By adopting good habits early and using a free, reliable invoicing solution like invoice24, electricians can reduce admin time, stay compliant, and focus on what they do best: delivering high-quality electrical work.

Whether you are newly qualified or an experienced contractor, investing time in proper record keeping today will save you time, money, and stress in the future.