How Long Should You Keep Business Records? An HMRC Record Keeping Guide
Five years, six years, or longer? Here is how long HMRC expects you to keep business records, what counts as a record, and how to store it all digitally without losing track.
Sole traders and partners must keep business records for at least five years after the 31 January submission deadline for the relevant tax year. Limited companies keep company records for six years from the end of the accounting period. Records means anything that supports the figures on your return, from sales invoices and receipts to bank statements and mileage logs, and digital copies are perfectly acceptable provided they are complete and readable.
The short version
Sole traders and partners: at least five years after the 31 January filing deadline for that tax year.
Limited companies: six years from the end of the accounting period the records cover, and longer in some circumstances.
Very late returns extend the clock. File more than four years after the deadline and you keep the records for fifteen months after submission instead.
Digital is fine. HMRC does not require paper, and Making Tax Digital actively expects digital records.
Lost records are not the end of the world, but you must tell HMRC you have used estimated or provisional figures.
How long do sole traders need to keep records?
If you are self employed as a sole trader or a partner, the rule is five years after the 31 January submission deadline for the tax year concerned. That is longer than most people assume, because the clock starts from the filing deadline rather than from the end of the tax year. The GOV.UK guidance on business records if you are self employed sets out the position, and HMRC can ask to see the records at any point within that window.
There is one extension worth knowing. If you send a return more than four years after its deadline, you must keep the records for fifteen months after you actually submit it, which can push the retention period well past the normal five years. Late filing therefore costs you twice, once in penalties and again in how long you are on the hook to produce paperwork.
What about limited companies?
Companies work to a different rule. You must keep company and accounting records for six years from the end of the last company financial year they relate to, and there are circumstances where you keep them longer, for example where a transaction spans more than one accounting period or where the company bought something expected to last beyond six years. Company records also cover more ground than tax records alone, including the register of members, directors’ details and records of resolutions.
The practical upshot for a director is that you are running two retention clocks side by side, one for the company’s statutory records and one for the accounting detail behind the corporation tax return. Keeping them together in one organised digital archive is far simpler than trying to separate them, and it is how our accounting service sets clients up from the start.
| Who you are | Minimum retention period | Clock starts from |
| Sole trader or partner | At least 5 years | The 31 January filing deadline for that tax year |
| Limited company | At least 6 years | The end of the financial year the records relate to |
| Employer with payroll | At least 3 years for PAYE records | The end of the tax year they relate to |
| VAT registered business | At least 6 years for VAT records | The date of the transaction |
These are minimums. Keep records longer where a transaction spans periods or an enquiry is open.
What actually counts as a business record?
A record is anything that evidences a figure you have reported. On the income side that means sales invoices, till records, and details of any other business income. On the cost side it is purchase invoices and receipts, bank and credit card statements, and records of anything taken out of the business for personal use. If you claim mileage you need the log, and if you use part of your home for work you need the basis of the apportionment.
Keep hold of these
All sales invoices and records of income received, including cash takings.
Purchase invoices and receipts for every expense you claim.
Business bank statements, credit card statements and loan or finance agreements.
VAT records and the working papers behind each return, if you are registered.
Payroll records, including what you paid staff and the deductions you made.
Records of stock and work in progress at your year end.
Mileage logs, home working calculations and anything else supporting an apportioned claim.
The point of the list is not bureaucracy for its own sake. Every one of those items is something an inspector could reasonably ask about, and having it to hand turns a stressful enquiry into a short exchange of emails. Setting up a system that captures it as you go is the single most useful thing our bookkeeping team in Widnes does for new clients.
Can you keep everything digitally?
Yes, and increasingly you are expected to. HMRC accepts digital records provided they show all the information the original did and can be produced legibly on request. In practice that means a clear scan or photograph of a receipt is as good as the paper slip, which is a relief given how quickly till receipts fade.
Making Tax Digital pushes this further. All VAT registered businesses already keep digital VAT records and file through compatible software, and Making Tax Digital for Income Tax is now bringing sole traders and landlords into digital record keeping and quarterly updates on a phased basis by income level. The HMRC guidance on using Making Tax Digital for Income Tax explains what is required once you are within it. If you are already storing everything digitally, that transition is far less disruptive.
Digital does not mean a folder of unnamed photographs on your phone. If you cannot find a specific receipt within a minute, the record effectively does not exist for practical purposes. Consistent naming and a monthly routine matter more than the software you choose.
What if records are lost or destroyed?
It happens, through fire, flood, theft or a failed hard drive. HMRC’s expectation is that you do your best to reconstruct the figures and are transparent about it. You can use estimated figures, meaning your best guess where the actual figure cannot be established, or provisional figures, meaning a temporary number you will replace once the real one is available. Either way, you must tell HMRC on the return which you have used.
Reconstructing is usually more possible than people expect. Bank statements can be reordered from the bank, suppliers can reissue invoices, and card statements evidence a great deal. What you cannot do is stay quiet and hope, because an unflagged estimate that later turns out wrong looks very different to a declared one. If you are in this position, our business support team can help you rebuild the picture and make the right disclosure.
Frequently Asked Questions
Do I need to keep the paper originals?
No. HMRC accepts digital copies as long as they contain all the information shown on the original and can be produced clearly if asked. Scanning or photographing receipts and then storing them in an organised structure is perfectly acceptable, and far more reliable than keeping fading paper in a shoebox.
How long should I keep payroll records?
PAYE records should be kept for at least three years after the end of the tax year they relate to. In practice many employers keep them alongside the rest of the accounting records for six years, which is simpler than running a separate shorter clock for payroll alone.
Does the five year rule start from the end of the tax year?
No, and this is the most common misunderstanding. It runs from the 31 January submission deadline for that tax year, not from the 5 April year end. That effectively adds nearly ten months to the period you might have assumed.
What happens if HMRC asks for a record I cannot produce?
You should explain the position honestly and provide whatever supporting evidence you do have, such as bank statements or a supplier’s duplicate. Failing to keep adequate records can attract a penalty in its own right, so it is always better to have the system in place than to rely on reconstruction.
Do I need to keep records for a business that has closed?
Yes. Closing the business does not end the retention obligation, and the same minimum periods still apply from the relevant dates. Make sure records are stored somewhere you will still be able to access them, rather than left on a work computer that gets sold or wiped.
Will Making Tax Digital change what I have to keep?
It changes the format more than the content. You still evidence the same income and expenses, but the records must be kept digitally and summarised through compatible software with quarterly updates. Businesses already working digitally usually find the change straightforward.
Can FD Accountants set up a record keeping system for us?
Yes. We help businesses across Widnes and Cheshire move to digital record keeping, choose software that suits how they actually work, and build a routine that takes minutes rather than evenings. Get in touch for a free initial consultation.
Building a system you can rely on
Record keeping is unglamorous, but it is the foundation everything else rests on. Good records make your return accurate, your accounts faster to prepare, and an HMRC enquiry a manageable inconvenience rather than a crisis. If your current system is a drawer and good intentions, get in touch with FD Accountants and we will help you put something sensible in place.
Straightforward Accounting. Real Support.
We help businesses across Widnes keep records that stand up to scrutiny, without turning bookkeeping into a second job.