Keeping Financial Records
Any business (Ltd Co, Sole Trader or Partnership) is required to retain their financial records for a specified period. The guide below outlines this.
LIMITED COMPANY
What to keep:
All bank / credit card statements
Details of all sales invoices issued
Copies of purchase invoices / card receipts for all expenditure
Copies of VAT returns and reports (if applicable)
Details of any loans or grants received
A record of all Directors, shareholders and company secretaries, as well as details of shareholder meetings, resolutions and minutes.
Retention Period: Keep for 6 YEARS after the Year End date of the year to which the records relate to. If a transaction or document spans more than one financial year, e.g. Loan paperwork, receipts for an asset purchased that will last longer than 6 years or Directors/Shareholders details - this will need to be kept longer.
SOLE TRADER or PARTNER in a PARTNERSHIP
What to keep:
All bank / credit card statements
Details of all sales income/invoices
Receipts and purchase invoices for all expenditure
Copies of VAT returns and reports (if applicable)
Records of your personal income
Details of any grants received or loan agreements
Retention Period: Keep for 5 YEARS after the 31 January submission deadline for the tax year to which they relate. e.g. records for tax year ending 5th April 2024 - has submission deadline of 31st January 2025 - therefore keep records to 31st January 2030.
EMPLOYER / PAYROLL RECORDS
What to keep:
Details of what you paid employees and deductions
Reports sent to HMRC
Details of HMRC payments
Details of employee sickness & absence
Tax Code notices
Details of any expenses or benefits
Details of any PAYE giving or salary sacrifice schemes
Retention Period: Keep for 3 YEARS after the end of the tax year to which they relate. For example, Payroll years run to the fiscal year (6th April to 5th April); for the Payroll year ending 5th April 2024, records should be kept until 5th April 2027.
Quick Tips
Records can be kept digitally on paper or in a mix.
I’d recommend storing records in a separate folder for each year—either a physical folder or digital folder—clearly labelled and referring to the year and retention, for example: “Ltd Co Records for YE 31 March 2024—Keep till 31 March 2030” OR “Sole Trader Records for YE 5 April 2024—Keep till 31 January 2030.”
Store Digital Records in a Cloud drive to avoid loss through a laptop failure.
Be mindful that if you store files/receipts/invoices in your emails and/or accounting software as attachments, if you stop using the software or have retention policies that auto-delete your emails, you may lose access to these attachments. So, save them as you go in a cloud file for security.
Before closing or moving away from accounting software, ensure you have all the attachments mentioned above and download all activity that covers the retention period.
If you close your payroll scheme, ensure you download all records and reports you must keep from your software before you remove the software.
