How Long Should I Keep My Tax Records?

Published / Last Updated on 22/04/2024

We are regularly asked the question of how long people should keep their tax and financial records.

The answer is not exact and will depend upon your circumstances and whether we are talking about personal tax records or business tax records.

Personal Tax Records and Self Assessment

Self Assessment is a voluntary disclosure of your assets and income for tax.  Many people do not need to file tax returns as they are employees, so income taxes are collected through payroll, tax relief on pensions is granted at source or via ‘net pay’ arrangement deductions of contributions from your gross pay before tax.  In addition, interest from savings will usually be within the tax-free savings allowance, dividends will usually be within the tax-free dividend allowance and other savings in tax free ISAs and tax deferred investment bonds.  That said, you may need to complete self assessment tax returns if:

  • If you move from being a basic rate taxpayer to a higher rate taxpayer.  This may mean more taxes due on savings interest and dividends as well as tax refunds on private pension contributions.
  • If you have rental income from property.
  • If you receive dividends or interest more than the tax-free allowances.
  • If you draw more from investment bonds than the 5% annual withdrawal.
  • If you have foreign income or gains.

HMRC may ‘pull’ your file at random to check your accuracy.  If you have no kept accurate records, you may get into difficulty.

HMRC also has no time limit as to when they may investigate you or if you have made an error with your submission.  We can also take a guide from HMRC’s own precedents:

  • HMRC will usually go back up to 4 years if there have been some mistakes or genuine errors in your tax returns.
  • HMRC may go back up to 6 years if you have been ignorant or careless in the accuracy of your tax returns.  To quote HMRC “there is no excuse for ignorance”.  If in doubt you should have contacted them direct or a tax adviser like us.
  • HMRC has been known to go back up to 12 years for offshore savings, investments, and trusts matters.
  • HMRC has been known to go back over 20 years if there has been deliberate tax evasion.
  • The onus of proof is on you and not on HMRC.  They are there to enforce tax law only and they have no bias whether you are rich, poor, are financially literate or not.

Our guidance therefore is to keep your tax and financial history indefinitely.

Tax Records for Business

HMRC has issued guidance that:

  • Self employed and partnerships should keep business records for up to 5 years.
  • Limited companies should keep business records for up to 6 years.

Our guidance is still to keep your tax and business records indefinitely.

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