Business Records: What to Keep and for How Long (HMRC Rules)

There is no single retention period. Company records run six years for tax but three under the Companies Act, VAT records six years and ten if you are in the One Stop Shop, self-employed records five years past a moving deadline, and payroll records three — six for minimum wage. All of them count from different dates.

Get one wrong and you either bin something HMRC later asks for, or store a decade of paperwork you never needed.

Here is the complete position, by record type and by business structure.

The retention table

Two worked examples, using HMRC’s own method. A sole trader filing their 2025/26 return online by 31 January 2027 keeps those records until at least the end of January 2032. An employee filing a 2025/26 return on time by the same date keeps theirs until at least the end of January 2028 — the first anniversary of that 31 January. (HMRC’s published versions of these examples still run on 2022/23 and 2024/25 figures; the mechanic is unchanged.)

When the clock runs longer

The headline periods are minimums. Several things extend them.

For limited companies, GOV.UK sets out four circumstances extending the six years:

• The records show a transaction covering more than one of the company’s accounting periods
• The company bought something it expects to last more than six years, such as equipment or machinery
• You sent your Company Tax Return late
• HMRC has started a compliance check into your Company Tax Return

For the self-employed, HMRC’s Compliance Handbook is more precise than the public guidance. Records must be kept until the latest of: the fifth anniversary of the 31 January following the year of assessment; the sixth anniversary of the end of the period where the return covers a period that is not a tax year; the completion of any enquiry into the matters the records relate to; and the day the enquiry window closes without an enquiry being opened.

If you file very late — more than four years after the deadline — the self-employed rule flips to 15 months after you sent the return. And if HMRC opens an enquiry, keep everything until it is formally closed, whatever the calendar says.

What limited companies must keep

GOV.UK splits this into two categories, both compulsory.

Records about the company itself:

• Shareholders, and the results of any shareholder votes and resolutions
• Debentures — promises to repay loans at a set future date — and who they must be repaid to
• Indemnities — promises to pay out if something goes wrong and it is the company’s fault
• Transactions when someone buys shares
• Loans or mortgages secured against the company’s assets

If you keep these anywhere other than the registered office address, you must tell Companies House.

Accounting records:

• All money received and spent by the company
• Details of assets owned
• Debts the company owes and is owed
• Stock owned at the end of the financial year, and the stocktakings behind that figure
• All goods bought and sold, and who you bought and sold them to and from — unless you run a retail business

Plus the underlying documents: receipts, petty cash books, orders, delivery notes, invoices, contracts, sales books, till rolls, bank statements and correspondence.

Two separate retention rules apply to a company, and they are not the same rule. The six years everyone quotes is the tax rule, running from the end of the financial year the records relate to. Company law is separate: under section 388 of the Companies Act 2006 a private company must keep its accounting records for three years from the date they are made, and a public company for six years. Different trigger, different length, different regulator. Keeping to the six-year tax period satisfies both in almost every case — which is why the company law rule is so often left out — but it is the Companies Act, not HMRC, that a director is answerable to for the accounting records themselves.

What sole traders and partners must keep

GOV.UK’s list is shorter but covers more ground than people expect:

• All sales and income
• All business expenses
• VAT records, if registered
• PAYE records, if you employ people
• Records about your personal income
• Any Self-Employment Income Support Scheme grants claimed

Proof means receipts for goods and stock, bank statements, chequebook stubs, sales invoices, till rolls and bank slips.

If you use traditional accounting rather than cash basis, you also keep what you are owed but have not received, what you have committed to spend but not paid, the value of stock and work in progress at the period end, your year-end bank balances, and how much you invested in and took out of the business during the year.

From the 2024/25 tax year, cash basis is the default for sole traders and for partnerships that have no corporate partners. You must opt out to use traditional accounting, so the extra records above apply only if you have made that choice.

What employers must keep

If you run payroll, you keep records of what you pay employees and what you deduct, the reports and payments you make to HMRC, employee leave and sickness absences, tax code notices, taxable expenses or benefits, and Payroll Giving Scheme documents including agency contracts and employee authorisation forms.

Three years from the end of the tax year they relate to — but National Minimum Wage records are the exception. Records created on or after 1 April 2021 must be kept for six years, running from the end of the pay reference period after the one they cover. That is a separate obligation from the PAYE rule and it is the one that catches employers out, because the payroll file has usually been thinned out on a three-year cycle by the time HMRC asks you to prove a worker was paid at least the minimum wage. Separate rules also cover proving you provided the correct statutory leave and holiday pay.

What HMRC can do if your records are inadequate

HMRC can estimate what you owe. For payroll, GOV.UK states that if you do not keep full records HMRC may estimate what you owe and charge a penalty of up to £3,000.

Companies face a £3,000 fine or director disqualification. GOV.UK states you can be fined £3,000 by HMRC or disqualified as a company director if you do not keep accounting records.

Compliance checks get longer. HMRC’s assessment time limits are 4 years as standard, 6 years where behaviour was careless, 12 years for offshore matters, and 20 years for deliberate behaviour or a failure to notify. Two of those need scoping in an article that covers companies and VAT as well as individuals. The 12-year offshore limit applies only to Income Tax, Capital Gains Tax and Inheritance Tax — there is no VAT equivalent. And the 6-year careless limit does not extend to VAT: for VAT the ordinary limit stays at 4 years and only deliberate behaviour takes it out to 20. Poor records make a careless finding more likely, and for the direct taxes that doubles the window.

The enquiry window sits on top. For a return filed on or before its filing date, HMRC has 12 months from the date the return is received to open an enquiry — that is the rule in TMA 1970 section 9A(2)(a), and it is the one most people quote. File late and the window instead runs to the next quarter day after the first anniversary of the day you actually filed, those quarter days being 31 January, 30 April, 31 July and 31 October. Either way, once an enquiry is open your records must be kept until it closes.

None of that is a threat, just arithmetic: weak records move you from the four-year bracket toward the six-year one and give HMRC grounds to estimate rather than accept your figures.

If records are lost, stolen or destroyed

There is a defined route, and using it beats saying nothing.

Limited companies must do their best to recreate the records, tell their Corporation Tax office straight away, and include that information in the Company Tax Return.

Self-employed people must do their best to provide figures and tell HMRC on filing whether they are using estimated figures — a best guess where actuals are unavailable — or provisional figures, temporary estimates to be replaced later.

Digital records under Making Tax Digital

Making Tax Digital changes the form of some records, not how long you keep them. Under MTD for VAT a defined subset of your VAT records must be held digitally in compatible software. Under MTD for Income Tax — live since 6 April 2026 for sole traders and landlords with qualifying income over £50,000, dropping to over £30,000 from 6 April 2027 and over £20,000 from 6 April 2028 — you keep digital records of self-employment and property income and expenses.

Neither replaces your paperwork. A scanned invoice image only replaces the original where it contains all the detail required for VAT purposes; if you type selected data from an invoice instead, keep the original, because your entry is not a copy of it.

Frequently asked questions

How long do I need to keep business records in the UK?
It depends on the record and the structure. Limited company records: 6 years for tax, from the end of the last company financial year they relate to — and separately, under section 388 of the Companies Act 2006, a private company must keep its accounting records for 3 years from the date they are made and a public company for 6. VAT records: 6 years, or 10 years if you use the VAT One Stop Shop (OSS) scheme or used the VAT Mini One Stop Shop (MOSS) scheme. Self-employed or landlord records: 5 years after the 31 January submission deadline for that tax year. PAYE and payroll records: 3 years from the end of the tax year, except National Minimum Wage records created on or after 1 April 2021, which must be kept for 6 years. Personal tax records where you are not self-employed and filed on time: 22 months after the end of the tax year.

How long do sole traders need to keep records?
At least 5 years after the 31 January submission deadline of the relevant tax year. Applying HMRC’s own worked example to a current year: a 2025/26 return filed online by 31 January 2027 means keeping the records until at least the end of January 2032. If you file more than four years after the deadline, the period becomes 15 months from when you actually sent the return.

What happens if I do not keep proper business records?
HMRC may estimate what you owe. GOV.UK states that a company can be fined £3,000 by HMRC or its director disqualified for failing to keep accounting records, and that an employer failing to keep full payroll records can face an estimated bill plus a penalty of up to £3,000.

Can I keep business records digitally instead of on paper?
Generally yes, and under Making Tax Digital certain records must be digital. But some documents must be kept in original form, and HMRC’s Income Tax guidance says you must continue keeping the original records and supporting documents used to prepare your return. A scanned image only replaces the original if it contains all the detail required for that purpose.

Records that stand up to a compliance check

SmartFiling handles bookkeeping on flexible plans — records kept in the form HMRC requires, retained for the right period, and available if a compliance check ever lands. We work with Xero, QuickBooks, FreeAgent, Sage and Dext.

Fixed fees agreed upfront, fully online, and every filing reviewed by an ICAEW Chartered Accountant.

SmartFiling is the trading name of Ballards Newman (Finchley) Limited, an ICAEW-regulated London practice with over twenty years of UK tax and compliance experience.