What records do I need to keep and how long for?

Keep evidence of all your business income and expenses: sales invoices, receipts, bank statements, payroll and VAT records and relevant contracts. How long depends on how you trade.

• Sole traders and partners: at least 5 years after the 31 January submission deadline for the tax year. If you filed your 2022 to 2023 return online by 31 January 2024, keep the records until at least the end of January 2029.
• Limited companies: 6 years from the end of the last company financial year they relate to. Keep them longer if a transaction spans more than one accounting period, you bought an asset expected to last more than 6 years, you filed your Company Tax Return late, or HMRC has opened a compliance check.

A company that fails to keep proper accounting records can face a £3,000 fine from HMRC or disqualification as a director.

Digital records are becoming compulsory. Making Tax Digital for Income Tax applies to sole traders and landlords with qualifying income over £50,000 from April 2026, over £30,000 from April 2027 and over £20,000 from April 2028. VAT-registered businesses already keep digital VAT records.

In practice, use cloud accounting software, connect your business bank feed, capture receipts as you go, and reconcile monthly. If you lose records, do your best to provide figures and tell HMRC when you use estimates.

Legislation: Taxes Management Act 1970, section 12B (sole traders and partners: fifth anniversary of the 31 January filing date); Finance Act 1998, Schedule 18, paragraph 21 (companies: sixth anniversary of the end of the period); Companies Act 2006, section 386 (duty to keep accounting records).