How Long Do I Need to Keep Tax Records?
If youre a sole trader, in a business partnership, or you run your own limited company, its very important to keep your tax records stored safely for a certain period of time. Weve got you covered. Find out everything you need to know about how long to keep financial records in the UK, right here. Aside from your legal obligations (well come onto that shortly) there are a broad range of reasons why its a good thing to ensure that your paperwork is in order. For example, if you need to double-check your past transactions, you wont be able to do that without proper recordkeeping, especially if you dont use any type of online accounting software. Even if you do use online accounting software, its 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 companys finances. 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 businesss 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 youve reclaimed). 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 youre a limited company or self-employed/in an unincorporated business partnership. Furthermore, there are additional responsibilities for employers, regardless of business structure. Heres a simple guide for how long to keep tax records in the UK:  Self-employed/partnership If youre 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 youll need to keep the records until 31 December 2025. 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 youve made  for example, Income Tax, pension contributions, NICs, and so on. If HMRC requests to see your tax records and  for whatever reason  you arent able to provide them, you may need to pay a penalty. Its also possible that theyll ask you to recreate the records. You have the right to appeal a penalty if you think its unjustified, but to avoid this long and potentially damaging process entirely, its best to simply keep your tax records for the required length of time. We can help  GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.