Record Keeping Best Practices

Good record keeping makes Making Tax Digital easier. The key is finding a routine that fits how you manage your rental properties, then sticking to it.

This guide gives you practical tips to keep your records accurate, make quarterly updates straightforward, and reduce the time you spend on record keeping each week or month.

Choose the right approach for your setup

How you keep records depends on whether you have a dedicated business bank account.

If you have a dedicated business bank account

Record everything that goes through the account. This includes property transactions, transfers, and any personal transactions that happen to pass through.

Why: Recording all transactions means your Provestor balance matches your bank balance. This makes it easy to spot missing or duplicate entries.

Set an opening balance when you add the account in Provestor. Use your bank balance as of 6 April (start of tax year) or the date you start using Provestor. This gives you a baseline for reconciliation.

Use transfers when money moves between your accounts. For example, if you transfer funds from your business account to your personal account (drawings), record it as a transfer. This keeps balances accurate without affecting your tax calculation.

For guidance on setting opening balances, see Managing bank accounts.

If you don't have a dedicated business bank account

Only record transactions that belong on your tax return. You don't need to track personal spending, transfers between accounts, or anything unrelated to your property business.

Why: Under cash basis accounting, you only need digital records of property income and expenses. Recording everything else creates unnecessary work and clutters your records.

Skip transfers entirely. If you're using a cash account and only recording property transactions, there's no need to track internal money movements. Just record rent received and expenses paid.

Don't set an opening balance. Cash accounts don't need reconciliation against a bank balance — you're just capturing the transactions that affect your tax return.

For more on cash basis accounting and what you need to record, see Cash basis accounting.

Establish a routine

Update records weekly or monthly, not quarterly. Weekly 10-15 minute sessions keep everything current and reduce errors. You'll remember transaction details while they're fresh. Monthly works if you have light transaction volume and aligns with statement cycles.

Quarterly is the minimum for MTD compliance, but it's inefficient. Three months of backlog means harder reconciliation, forgotten details, and higher error risk.

Use the right source for your data

Not all record keeping methods are equal. Follow this hierarchy for best results:

1. Bank statements (fastest and most accurate)

If you have a dedicated business bank account, upload bank statements monthly.

Why bank statements are best:

• Every transaction is already listed
• AI extraction is faster than manual entry
• Harder to miss transactions
• Easy to reconcile balances

How to use them effectively:

• Upload monthly, not quarterly
• Review and categorise immediately after upload
• Check the account balance in Provestor matches your bank statement
• Delete any duplicate transactions during review

See Uploading bank statements for detailed guidance.

2. Letting agent statements (essential for agent-managed properties)

If you work with a letting agent, upload agent statements monthly.

Why agent statements matter:

• Shows the breakdown of rent, fees, and expenses you need for MTD
• The net payment to your bank doesn't show this detail
• Agent statements show when rent was actually collected from tenants

How to use them effectively:

• Process statements as soon as you receive them
• Don't wait until the quarterly deadline
• Reconcile net payments to your bank deposits periodically

See Recording from agent statements for detailed guidance.

3. Receipts (last resort for transactions not on statements)

Only use receipt uploads for expenses that don't appear on bank or agent statements.

When to use receipts:

• Cash purchases
• Expenses paid through personal accounts you're not uploading
• One-off costs not reflected in any statement

Why receipts are less efficient:

• Slower than uploading statements
• Easy to lose or forget receipts

How to use them effectively:

• Photograph receipts immediately (don't let them pile up)
• Upload and categorise promptly
• Store originals for HMRC (5-year retention requirement)

See How to upload receipts for detailed guidance.

Keep your records accurate

Match balances regularly

If you're tracking account balances (dedicated bank account with opening balance set):

After each statement upload or monthly update:

1. Check the balance shown in Provestor
2. Compare it against your bank statement closing balance
3. If they don't match, review transactions to find missing or duplicate entries

This simple check catches errors before they compound.

Use clear descriptions

When adding or reviewing transactions, include:

• What the transaction was for
• Which property it relates to
• Relevant dates or context

Good examples:

• "October rent - 12 Main Street"
• "Roof repairs - 45 Church Lane - emergency callout"
• "Annual buildings insurance - all properties"

Why: Clear descriptions make it easier to review transactions later, answer HMRC questions, or hand records to an accountant.

Don't record transactions that don't belong on your tax return

Don't record as income or expenses:

• Tenant deposits (held on trust, not taxable income)
• Transfers between your own accounts
• Personal transactions unrelated to your property business

Why: These don't affect your tax calculation. Recording them clutters your records and risks errors.

For guidance on what counts as income and expenses, see:

• Adding rental income
• Capturing expenses

Keep supporting documents for HMRC

Digital records in Provestor are required for Making Tax Digital, but you also need to keep supporting documents.

What to keep:

• Receipts for expenses
• Invoices from contractors and suppliers
• Bank statements
• Letting agent statements
• Mortgage statements

How long: At least 5 years after the 31 January tax return deadline for each tax year.

Example:

• Tax year 2024/25 ends on 5 April 2025
• Final declaration deadline is 31 January 2026
• Keep records until at least 31 January 2031

Storage options:

• Paper originals in files or folders
• Digital scans in cloud storage
• Combination of both

See Digital record-keeping requirements for full details on HMRC's retention rules.

Common mistakes to avoid

Recording agent net payments as income

The mistake: Recording the net payment from your letting agent as "cash in" or rental income.

Why it's wrong: You should record the breakdown from the agent statement (rent collected, fees, expenses). The net payment is just what's left over — recording it as income would double-count everything.

Fix: Upload agent statements to capture the detailed transactions. If you want to track the net payment for reconciliation, record it as a transfer (not income).

See Recording from agent statements for details.

Waiting until quarterly deadlines

The mistake: Entering three months of transactions all at once before the quarterly deadline.

Why it's inefficient: Hard to remember transaction details, high risk of errors, stressful time pressure, difficult to reconcile.

Fix: Update records weekly or monthly. Small, regular sessions are faster and more accurate than big quarterly marathons.

Not reconciling balances

The mistake: Uploading statements but never checking if your Provestor balance matches your bank balance.

Why it matters: Mismatched balances mean you've missed transactions, recorded duplicates, or made entry errors. These compound over time.

Fix: After each statement upload, compare balances. If they don't match, review transactions immediately while everything is fresh.

Mixing personal and business without tracking transfers

The mistake: Using a business account for personal expenses but not recording transfers when you move money around.

Why it causes problems: Your Provestor balance won't match your bank, making reconciliation impossible.

Fix: Either keep business and personal strictly separate, or record all transactions (including transfers) to maintain accurate balances.

Losing receipts before recording them

The mistake: Collecting receipts but not photographing or uploading them promptly.

Why it's inefficient: Receipt ink fades, paper receipts get lost, details are forgotten.

Fix: Photograph receipts immediately when you receive them. Upload and categorise within a week.

Next steps

• Record keeping checklist — Step-by-step workflow for your regular updates
• Introduction to record keeping — Overview of how record keeping works in Provestor
• Uploading bank statements — Fastest method if you have a business bank account
• Recording from agent statements — Processing letting agent data