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How Long Do I Need to Keep Tax Records?

If you’re a sole trader, in a business partnership, or you run your own limited company, it’s very important to keep your tax records stored safely for a certain period of time. Do you know how long to keep tax records? We’ve got you covered. Find out everything you need to know about how long to keep financial records in the UK, right here.

Why is good record keeping important?

Let’s start with a basic question: what’s the benefit of keeping good records? Aside from your legal obligations (we’ll come onto that shortly) there are a broad range of reasons why it’s a good thing to ensure that your paperwork is in order. For example, if you need to double-check your past transactions, you won’t be able to do that without proper recordkeeping, especially if you don’t use any type of online accounting software. Even if you do use online accounting software, it’s worth keeping the original records in a safe place so that if HMRC decides to look into your business, you can provide them with a full, comprehensive accounting of your company’s finances.

Which records do you need to keep?

Put simply, you should retain any records or documents that you received or prepared to complete your Company Tax Returns or Self Assessment Tax Returns. This includes your business’s accounting records (details of assets, liabilities, income, and expenditure), business records (bank statements and details of all purchases and expenses), and VAT records (all invoices processed and received, VAT receipts for expenses you’ve reclaimed).

How long do I need to keep tax records?

Once you know which records need to be stored securely, you need to find out exactly how long to keep financial records in the UK. To a certain extent, that depends upon the structure of your business –whether you’re a limited company or self-employed/in an unincorporated business partnership. Furthermore, there are additional responsibilities for employers, regardless of business structure. Here’s a simple guide for how long to keep tax records in the UK:

  • Self-employed/partnership– If you’re self-employed or running a business partnership, you should keep your records for a minimum of five years after the 31 January submission deadline for the relevant year. For example, if you sent your 2018-19 tax return by 31 January 2020, then you would need to keep those records until the end of January 2025.

  • Companies – If you run a limited company, the rules are a little different. In short, you should keep all of your tax records for a minimum of six years, starting from the end of your current accounting period. For example, if the accounting period ends on 31 December 2019, then you’ll need to keep the records until 31 December 2025.

So, what are the additional responsibilities for employers? Essentially, you need to retain your PAYE records for three years, starting from the end of the tax year that they relate to. This will include the salary details for all employees, as well as deductions that you’ve made – for example, Income Tax, pension contributions, NICs, and so on.

What happens if I don’t keep records properly?

If HMRC requests to see your tax records and – for whatever reason – you aren’t able to provide them, you may need to pay a penalty. It’s also possible that they’ll ask you to recreate the records. You have the right to appeal a penalty if you think it’s unjustified, but to avoid this long and potentially damaging process entirely, it’s best to simply keep your tax records for the required length of time.

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GoCardless (company registration number 07495895) is authorised by the Financial Conduct Authority under the Payment Services Regulations 2017, registration number 597190, for the provision of payment services. GoCardless SAS (23-25 Avenue Mac-Mahon, Paris, 75017, France), an affiliate of GoCardless Ltd (company registration number 834 422 180, R.C.S. PARIS), is authorised by the ACPR (French Prudential Supervision and Resolution Authority), Bank Code (CIB) 17118, for the provision of payment services.