How many years should you keep your tax and accounting records for?

This guide explains which tax records small businesses (including self-employed and limited companies) should keep, and for how long, according to current HMRC rules.

In an ideal world, everyone would maintain records for the same period, regardless of their business structure.

In reality, the time you must keep records varies.

For individuals who are not self-employed or limited company directors, you must keep all tax records for 22 months from the end of the tax period they relate to.

But what about business-related tax records?

Sole traders & partnerships

If you are self-employed and don’t work via a limited company, you must keep all of the following in a safe place:

1. A record of all sales and takings, including cash receipts.
2. A record of all purchases and expenses, including cash purchases.
3. VAT records – including sales and purchase invoices, import and export documentation, and details relating to your VAT account.
4. PAYE records if you employ anyone.

You must keep these records for at least five years after the 31 January submission deadline of the relevant tax year.

Limited companies

If you run your own limited company, you must keep the following records:

1. Accounting records of all assets, liabilities, income and expenses.
2. Business records including bank statements, paying-in books, purchases, expenses and sales details.
3. VAT records – including sales and purchase invoices, import and export documentation, and VAT account details.
4. Company records relating to directors, secretaries, shareholders, company resolutions, minutes of meetings, and entries on the PSC register (People with Significant Control).
5. Any debentures, indemnities, loans secured against company assets, and details of share transactions.

These records must be kept safe for at least six years following the end of your company’s last financial year.

Construction Industry Scheme (CIS)

You must keep the following details by law if you operate the CIS scheme:

• Contractors – details of all payments made to subcontractors for work done and materials purchased. For example, subcontractor invoices.
• Subcontractors – copies of invoices issued and payment/deduction statements received.

You must keep these records for at least three years following the tax year they relate to.

Employers

If you are an employer, you must keep all PAYE records for three years (in addition to the current year).

Records you should keep include:

• Payments made to employees.
• Deductions from wages (Income Tax, National Insurance, Student Loan repayments).
• Details of employee benefits and expenses.
• Tax code notices.
• Records of statutory payments (sick pay, maternity pay, etc.).

Summary of record-keeping rules

Type of business/records	How long to keep records
Individuals (not self-employed)	22 months from end of tax period
Sole traders & partnerships	5 years after the 31st January deadline
Limited companies	6 years from end of financial year
CIS contractors & subcontractors	3 years from end of tax year
Employers (PAYE)	3 years (plus current year)

Electronic records are acceptable

HMRC does not require business records to be kept on paper. You can store invoices, receipts, bank statements and other accounting records electronically, provided they are complete, legible and can be produced if requested.

Many accounting packages allow you to attach scanned copies or photographs of receipts directly to transactions, making it much easier to retain supporting evidence. If you scan paper documents, ensure the copies are clear and backed up securely.

Whatever system you use, you should be able to demonstrate how the figures entered on your tax return or company accounts were calculated if HMRC asks for supporting information.

When should you keep records for longer?

The time limits we’ve described in this guide are the minimum legal requirements.

In reality, there are situations where keeping your records for longer is advised.

For example, if HMRC opens an enquiry before the normal retention period expires, you should retain all relevant records until the enquiry has ended. If your business owns long-term assets, it is also worth keeping purchase invoices and supporting documentation until after the asset has been sold and any tax consequences have been dealt with.

Limited companies may also wish to keep certain statutory company records permanently, such as the certificate of incorporation, articles of association and registers of members, as these form part of the company’s legal history.

Failing to keep adequate business records can result in penalties and may make it more difficult to support figures submitted on tax returns if HMRC opens an enquiry.

Although HMRC sets minimum record-keeping requirements, many businesses choose to retain accounting records for at least six years, even where a shorter statutory period applies.

In some cases, such as where HMRC suspects deliberate tax avoidance, records can be requested that go back up to 20 years.

Most small business owners use business accounting software, which helps keep their records organised and secure.

If you change your software provider (e.g. from Xero to FreeAgent), make sure you (or your accountant) downloads your data before your subscription ends. This is an easy thing to overlook. And keep regular backups if you can.

Keep any offline paperwork safe too, especially statutory company records if you operate through a limited company.