If you need to fill in a tax return every year you will also need to keep the records related to the tax year in question. This is the case whether you are an employee, self-employed or run a Limited Company. The rules for keeping records are however a bit different for each category.
Why record keeping is important
Whether you fill in a Self Assessment tax return as an employee or as self-employed, or whether you prepare a Company Tax Return for a Limited Company, you need to keep all related records. You need those records to fill in the tax return correctly. Another reason is that HMRC may ask for the documents if they check your tax return.
What records to keep
Employees and company directors
You need to keep any relevant records you have used to complete your Self Assessment tax return or your claim form if you’re claiming benefits or allowances. These include but are not limited to:
- Documents that show your income from employment and/or benefits as well as pension information
- Details about any form of savings or investment income you may have
- Records about any rental income
- Any documents that relate to overseas income
- Tax forms received from your employer (P45, P60, P11D) and P160 (for pensions)
You should also keep any information related to additional income such as tips. This could be meal vouchers or lump sums such as “golden hellos”.
If you have paid for work expenses such as travel or specialist clothing, you may be able to claim tax relief for these to reduce your tax bill. Make sure you keep any receipts.
Self employed
Whether you’re a sole trader or in a partnership you must keep records of your business income and expenses for your tax return. This also includes any records for personal income.
You need to keep any records that are proof for income and sales as well as all business expenses. If you’re registered for VAT, you need to keep separate VAT records. If you have any employees, you need to keep PAYE records.
These records can be receipts for goods and stock, bank statements, chequebook stubs, sales invoices, till rolls and bank slips.
Limited Companies
As a Limited Company your records need to be more in depth than for a sole trader or partnership. Within your accounting records you also need to include details of assets and liabilities, such as outstanding invoices, debts, stock information, etc.
You also need to keep business records (bank statements and paying-in slips, accounts books, purchases and sales information) as well as details of directors, shareholders, company secretaries, and the results of shareholder votes.
How long do you need to keep records?
Employees and company directors
If you send your tax return on or before the deadline you need to keep your records for at least 22 months after the end of the relevant tax year.
Should you be filing late, you have to keep your records for at least 15 months after you’ve sent the tax return.
Self employed
If you’re self employed you need to keep your records for a minimum of 5 years after the submission deadline of the relevant tax year (31st January).
If you are filing your tax return more than 4 years after the deadline, make sure you keep your records for 15 months after you send the tax return.
Limited Companies
You must keep Company records for 6 years from the end of the financial year they relate to. This time is extended if the company buys items that are expected to last more than 6 years, or you have transaction that cover more than one accounting period.
For more details please visit the link related to your status:
Details for employees and company directors
What if records are lost or stolen?
If your records are lost, stolen or otherwise unavailable you have to do your best to recreate them. You can use provisional figures and make adjustments later if need be. You also need to tell HMRC that your records are not available and the reason why.
Here at Alba we can take the load of keeping records off your shoulders. We provide bookkeeping as part of our services. If you have any questions regarding the records you need to keep for your particular situation, please do not hesitate to get in touch. You either email us admin@alba.uk.com or call us 01509 853779.
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