How Long to Keep Accounting Records

UK businesses are legally required to keep accounting records for a minimum period. The exact length depends on your business structure, the type of record and which authority requires it. Getting this wrong can result in penalties, failed audits or an inability to defend yourself during an HMRC enquiry.

This guide sets out the retention periods you need to know.

Retention periods at a glance

Self Assessment (sole traders and partnerships)

If you file a Self Assessment return, HMRC requires you to keep records for 5 years after the 31 January submission deadline for the relevant tax year.

For example:

The records you must keep include:

• Sales invoices and proof of income
• Purchase invoices and receipts for business expenses
• Bank statements and building society statements
• Mileage logs for vehicle expense claims
• Details of personal income from other sources

If you send your return late, the 5-year period starts from the date you actually filed, not the original deadline.

Limited companies

Limited companies must keep accounting records for 6 years from the end of the accounting period they relate to. This is set out in the Companies Act 2006, sections 386-389.

The records must be sufficient to:

• Show and explain the company’s transactions
• Disclose the financial position with reasonable accuracy at any time
• Enable directors to prepare accounts that comply with the Act

This includes:

• Day-to-day records of money received and spent
• Records of assets and liabilities
• Statements of stock held at the end of each financial year
• Statements of stocktaking used to prepare those stock records
• All invoices, both sales and purchase

What “6 years” means in practice

If your accounting period runs 1 January to 31 December, you must keep those records until at least 31 December six years later. For most companies, this means holding at least 6 complete years of records at any point in time.

VAT records

If your business is VAT-registered, you must keep VAT records for 6 years. The records include:

• VAT account – a summary of total output VAT and input VAT for each return period
• Sales invoices (copies of all VAT invoices issued)
• Purchase invoices (VAT invoices received from suppliers)
• Import and export documents
• Credit and debit notes
• Records of goods for personal use or non-business purposes
• Records of any VAT adjustments (partial exemption, capital goods scheme)

Under Making Tax Digital, these records must be kept in a digital format using MTD-compatible software. You cannot rely solely on paper records for VAT purposes.

PAYE and payroll records

Employers must keep PAYE records for 3 years after the end of the tax year they relate to. Records include:

• Payroll records – gross pay, tax deducted, NIC, student loan deductions
• P45s and P60s (copies)
• P11D forms (benefits and expenses)
• Expense payments and benefits provided to employees
• Statutory pay calculations (SSP, SMP, SPP)
• Starter and leaver information

Construction Industry Scheme (CIS)

If your business operates in construction and uses subcontractors, you must keep CIS records for 3 years after the end of the tax year. These include:

• Verification details for each subcontractor
• Payment and deduction statements
• Monthly CIS returns submitted to HMRC

Digital vs paper records

HMRC accepts both digital and paper records. However, practical considerations strongly favour digital:

If you keep paper records, you should consider digitising them. HMRC accepts scanned copies as valid evidence, provided the digital version is a clear, accurate and unaltered reproduction. Once digitised, you can destroy the paper originals, though some businesses choose to keep both.

For guidance on digitising receipts, see our receipt management guide.

When HMRC can go further back

The standard retention periods assume your records are complete and your returns are accurate. HMRC can extend its enquiry window in certain circumstances:

This means if HMRC believes there has been a deliberate error or fraud, they can look back 20 years. In these cases, having destroyed records after the standard period could work against you.

A cautious approach is to keep records for at least 7 years and indefinitely for any period where there is uncertainty about the accuracy of your returns.

What to do with old records

When records pass their retention deadline:

1. Review them to confirm nothing is still needed (ongoing disputes, open enquiries, pending insurance claims)
2. Destroy securely – shred paper documents, securely delete digital files
3. Document the destruction – keep a log of what was destroyed and when

For data that includes personal information (employee records, customer details), you also need to comply with GDPR requirements. Keeping personal data longer than necessary is itself a compliance issue.

Penalties for inadequate records

Failing to keep adequate records can result in:

• HMRC penalties of up to £3,000 for each failure to keep or preserve records
• Estimated tax assessments – HMRC will estimate your tax bill, usually unfavourably
• Disallowed deductions – expenses without supporting records may not be accepted
• Companies House prosecution – directors can be prosecuted for failing to keep adequate accounting records under the Companies Act

Practical tips

• Back up digital records to at least two separate locations (cloud and local)
• Set calendar reminders for when records reach their destruction date
• Use consistent file naming so records can be found quickly if needed
• Keep a record retention schedule listing each type of record and its destruction date
• Archive rather than delete – moving old records to cheaper storage is better than risking premature destruction
• Integrate your bookkeeping software with cloud storage for automatic archiving