Keeping business records for individuals and directors

If you’re a UK taxpayer you should keep a record of the tax you pay each year and other records relating to your income and outgoings. You’ll need these to help you complete your tax return or to answer any questions from HM Revenue & Customs (HMRC) about a return you’ve already completed.

Why you need to keep records

If you have to send HMRC a tax return, you should keep all the records and documents you need to enter the correct figures. If HMRC needs to check your return, they may ask to see the records you used to complete it.

If you don’t keep adequate records or if you don’t keep your records for long enough, you may have to pay a penalty.

Types of records you may need to keep

This guide deals with typical records that employees, directors or non-working individuals, including pensioners, may need to keep. If you’re self-employed or in business please review the relevant guide available.

Income from employment

You should keep documents containing details about your pay and tax that your employer provides, including:

  • your P45 – if you leave your job, part 1A of this form shows your pay and tax to the date you left
  • your P60 – if you’re in a job on 5 April, this shows your pay and tax details for the tax year
  • form P11D – this shows details of your expenses and benefits, such as a company car or health insurance
  • certificates for any Taxed Award Schemes
  • information about any redundancy or termination payment

You should also keep evidence of any other income or benefits from your employment not covered in the list above, for example:

  • any tips or gratuities received (but not if your employer pays them to you through a method called the ‘tronc’ system, which means they’ll have deducted tax already
  • benefits in kind, for example meal vouchers you receive in connection with your employment from someone other than your employer
  • any lump sum payments not included on your P60 or P45, for example incentive payments or golden hellos

Expense records

When you’re employed you may have had to pay expenses out of your own pocket in order to do your job. You may be able to claim for some or all of these expenses to reduce the tax you’ll have to pay. You’ll need to keep records so you can include the expenses in your Self Assessment tax return.

Benefits records

You should keep any documents relating to:

  • social security benefits
  • Statutory Sick Pay
  • Statutory Maternity, Paternity or Adoption Pay
  • Jobseeker’s Allowance

Pension records

You should keep:

  • your form P160 (part 1A), which you received when you retired and started getting a pension from your former employer
  • your form P60 giving details of your pension and the tax deducted
  • any other details of a pension (including State Pension) and the tax deducted from it

Interest, dividends or other income from UK savings, investments or trusts

You should keep all:

  • bank and building society statements or passbooks
  • statements of interest and any other income you’ve received from your savings and investments
  • tax deduction certificates supplied by your bank
  • dividend vouchers received from UK companies
  • other vouchers such as scrip dividend vouchers
  • unit trust tax vouchers
  • life insurance chargeable event certificates
  • details of any income you receive from a trust

You should also keep:

  • details of exceptional amounts you’ve received, for example an inheritance or other windfall
  • correspondence and other documentation relating to your savings and investments

Income from property

If you get income from letting out a property, you’ll need to keep details of the rents you’ve received and the expenses you’ve paid.

Foreign income or gains

You’ll need to keep any dividend vouchers, tax certificates and personal financial records including:

  • evidence of overseas earned income, for example from employment, self-employment or property letting
  • receipts for any expenses you wish to claim
  • dividend certificates from overseas companies
  • certificates or other evidence of tax paid – either in the UK or overseas

Income from employee share schemes or share-related benefits

You should keep information on any share options awarded or share participation arrangements including:

  • copies of share option certificates and exercise notices
  • correspondence about any changes to your options
  • information about what you paid for your shares and the relevant dates
  • details of any benefits you’ve received as an employee shareholder

Capital Gains Tax records

The records you should keep depend on your circumstances – but it’s a good idea to keep any records associated with an asset you’ve owned in case you make a gain or loss when you sell, give away, transfer or exchange it.

Always keep any information that you have used to:

  • work out your capital gain or loss
  • fill in your tax return
  • make claims – such as a claim for losses

How long must you keep your records

You must keep your records for a minimum period, as described below, in case HMRC decides to make a check into your return. Note that HMRC has longer to make a check if your tax return is received after the filing deadline of 31 January.

If you send in your return on or before 31 January 

If you send in your tax return on or before the normal filing deadline of 31 January, you must usually keep your records for a further year after this deadline. This applies to both online and paper tax returns.

For example, for a 2013-14 return filed on or before 31 January 2015, you must keep your records until 31 January 2016.

However, you may need to keep them longer if a check has already been started – in this case you’ll need to keep your records until HMRC writes and tells you they’ve finished the check.

If you send in your return after 31 January

If you send in your tax return after the normal filing deadline of 31 January, either because it was issued late or because you sent it back late, you must usually keep your records for 15 months after the date you sent it in. This applies to both online and paper tax returns.

For example, for a 2013-13 return filed on 28 Feb 2015, you must keep your records until 31 May 2016.

However, you may need to keep them longer if a check has already been started – in this case you’ll need to keep your records until HMRC writes and tells you they’ve finished the check.

If your records are lost or destroyed

If your records are lost or destroyed and you can’t replace them you must tell HMRC what has happened and do your best to recreate them.

Once you’ve gathered replacement information you use this to complete your tax return. You must tell HMRC whether any provisional figures are:

  • estimated figures – you want HMRC to accept these as final figures
  • provisional figures – you are using these until you can confirm the figures (you must tell HMRC when you will be supplying actual figures)

If you make adjustments at a later date and you’ve underpaid tax there may be interest and penalties to pay.