If you’re contracting through a limited company, using an umbrella, or trading as a freelancer, you must maintain accurate financial records. The length of time you must keep them depends on the type of tax and your business structure.
How long do you have to keep your financial records?
The length of time depends on your trading structure and the type of tax involved. Here’s a quick overview:
The key record-keeping deadlines are as follows:
| Type of record | How long to keep | Reference |
|---|---|---|
| Limited company records | 6 years from the end of the company financial year they relate to, and sometimes longer | GOV.UK |
| Employer PAYE records | 3 years (in addition to the current year) | GOV.UK |
| Sole trader (Self Assessment) | 5 years after the 31 January filing deadline | GOV.UK |
| Personal income tax (not self-employed) | 22 months from the end of the tax year for an on-time return | GOV.UK |
As you can see, the exact deadline varies — but using six years as a general rule will cover most limited company tax and accounting records.
Limited company owners
If you are a limited company owner, you should keep your business-related tax and accounting records for a minimum of 6 years from the end of the company financial year they relate to. Some records may need to be kept for longer, for example if they cover more than one accounting period, relate to a long-term asset, a return was filed late or HMRC has opened a compliance check.
Umbrella company contractors only have to keep personal tax records, as they are employees, not business owners.
Employers
If you are also an employer, you need to keep all PAYE records for 3 years (in addition to the current year). If you operate through your own company and pay yourself (and/or others) a salary, then you are an ’employer’. You need to maintain records of all deductions made from employees’ pay, benefits, expenses and any statutory payments.
Company directors
Being a company director does not automatically mean you have to file a Self Assessment tax return.
You may need to file one if, for example, you receive dividends or other untaxed income, have capital gains to report, meet another Self Assessment criterion, or HMRC asks you to submit a return.
Personal income tax
For personal income tax, you normally need to keep relevant records of income and any capital gains for 22 months from the end of the tax year if your return was filed on time. Different deadlines can apply if you submit your return late.
Umbrella company contractors
Umbrella company contractors may also need to complete Self Assessment tax returns if they earn additional income on which tax has not already been deducted by the umbrella scheme. See our guide on umbrella employees and Self Assessment.
Sole traders and freelancers
If you’re a self-employed freelancer (a ‘sole trader’), all of your income is taxed via Self Assessment, and you must keep all of your records safe for at least 5 years after the 31 January filing deadline of the relevant tax year.
Given that there are different statutory deadlines for PAYE, income tax, and business taxes, keeping records for six years is a useful general rule for limited company owners, provided you also check whether any particular records need to be kept for longer.
Why you should keep hold of your tax records
Aside from complying with your legal obligations to do so, there are plenty of reasons why you shouldn’t be too hasty in deleting old records.
- If HMRC decides to look into your business or personal tax affairs, you will need to produce your accounting records for the inspector (HMRC compliance checks).
- In the future, you may need to double-check your past work or search for a transaction for your own purposes.
- Online accounting software has become very much the norm these days, and is widely used by limited company accountants. This means most of your tax records can now be stored securely in the cloud.
- Most limited company accountancy software will enable you to scan and upload receipts and invoices, making it much easier to keep a complete digital record.
Digital vs paper records
Many businesses now keep the majority of their records digitally, using cloud accounting software such as FreeAgent and Xero.
HMRC accepts digital records, provided they are accurate, complete and accessible. In practice, this means:
- You can store invoices, receipts and bank records electronically
- Scanned copies are usually acceptable, as long as they are clear and legible
- You should keep regular backups
For most everyday accounting records, there is no need to keep the paper original once you have a clear and complete digital copy. You may still want to retain original documents where they have a separate legal or evidential importance.
Which limited company records do I need to keep?
If you run your own limited company, you are required to keep the following records for a minimum of 6 years from the end of the company financial year they relate to, and sometimes longer:
- Accounting records – including details of all your company’s assets, liabilities, income and expenditure.
- Business records – including bank statements, details of money received and spent, purchases and expenses.
- VAT records – including copies of invoices sent and received, plus evidence supporting VAT reclaimed on business expenses.
For a broader look at what your company should retain, see our guide to keeping accurate limited company accounting records.
As an employer, you also need to retain your PAYE records for at least three years, including details of all salaries paid to employees and any deductions made (such as Income Tax, NICs, and pension contributions).
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