How long should small businesses keep tax records for?

A new guide has been produced explaining which tax records small businesses (including the self employed and limited companies) should keep, and for how long.

HMRC’s guide to ‘Keeping records for business – what you need to know’ – explains that all business-related tax and accounting records should be kept safe for at least 6 years.

For some areas, the time period is shorter however;

If you are an employer, you must keep all PAYE records for 3 years (in addition to the current year). If you are a CIS contractor, you must keep CIS records for the same period of time.

For personal taxpayers, you need to keep all your tax records for 22 months from the end of the tax period to which they relate.

Sole Traders & Partnerships

If you are self-employed, and do not operate via a limited company, you must maintain the following records:

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 VAT sales and purchase invoices, import and export documentation, and any other details relating to your VAT account.

Limited Companies

If you operate via a limited company, you must keep the following records:

1. Accounting records – including details of all assets, liabilities, income and expenditure.

2. Business records – including bank statements, paying-in books, purchases, expenses and sales details.

3. VAT records – including VAT sales and purchase invoices, import and export documentation, and any other details relating to your VAT account.

Construction Industry Scheme (CIS)

The following details must be maintained by law:

1. Contractors – Details of all payments made to all subcontractors for work done and materials subcontractors have purchased. For example, subcontractor invoices.

2. Sub-Contractors – Details of all payment and deduction statements. For example, copies of invoices issued and payment statements received.

Employers

As mentioned above, employers must keep all PAYE records for 3 years (in addition to the current year).

Details include:

1. Payments made to employees

2. Any deductions from your employee wages of Income Tax, National Insurance contributions (NICs) and Student Loan payments

3. All details of employee benefits and expenses

4. All records of statutory payments (including sick pay and maternity pay).

You can look up further details on record keeping, and specific requirements for employers with HMRC’s pdf guide to ‘Keeping records for business – what you need to know’.

Bytestart Limited info@ByteStart.co.uk

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