If you’re a sole trader or unincorporated business with an annual income of less than £79k, HMRC wants you to use its simplified ‘cash basis’ scheme, where you’re just taxed on money going in and out of the business.
HMRC says you’d just have to work out cash received in the tax year, less any money spent on allowable business expenses, thus avoiding complex accounts meant for larger companies. There is also a flat-rate ‘simplified expenses’ scheme.
Short introduction to cash basis and simplified expenses
Longer video on the subject