Keep Your Tax Records

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Updated on : 10-Nov-2024   06:38 PM GMT | 4 min read

Keep your Tax Records to File Tax Returns Correctly to HMRC

Maintenance of records is very necessary in case you have to send self-assessment tax return to HMRC. You must keep all your records updated in order to file your tax returns correctly. HMRC may ask you for any document or record during the checking of your tax return.

In case you are a self-employed person, then also you need to maintain your records in order to tell your business income and its source to HMRC.

How to keep your Tax Records?

There are no rules made by HMRC on how you need to maintain your records. You can keep these records on paper or in a digital form or as a part of software such as bookkeeping software.

In case your records are not found accurate, updated and readable – You will be charged with a penalty from HMRC. Hence, keep your records accurate, updated and readable as it can prove to be very beneficial for you during the checking of your tax return in future.

Lost or Destroyed Tax Records

Make copies of your documents as much as you can and retain it with you, so that it will help you in future in case you lost any of the documents. For ex – Copies of statement from Banks, duplicate invoices from suppliers etc. In case you lose any of the documents, you can use these copies for validation. If you cannot recreate all your records, you can use provisional or estimated figures.

Provisional figures are those figures which can be used for confirmation at a later stage through paperwork whereas estimated figures are those figures which cannot be confirmed at a later stage.

In case figures shown by you in your tax return are wrong and you have paid less tax, you may be charged with interest & penalties from HMRC.

How long to keep Tax Records?

How long you should keep your records totally depends upon the time of sending tax return to HMRC – whether you are sending it before or after the deadline. HMRC may check your records anytime to verify that whether you are paying the right amount of tax or not.

Tax Returns sent on or before the deadline

Records must be maintained for at least 22 months for a tax return after the end of the tax year. For ex – Suppose for 2018-19 tax year, you submitted your tax return to HMRC online by 31st January 2020. The records for this tax year must be retained for at least end of January 2021.

Tax Returns Sent After the Deadline

After sending the tax return to HMRC, you must maintain your records for at least 15 months.

Documents for Employees & Limited Company Directors to maintain

The documents which are mandatory for employees and limited company directors to maintain are as follows –

Income from Employment

1. P45 – P45 is a document prepared by the employer when you left your job. It shows your salary and tax until the date you were employed in the organisation.
2. P60 – P60 is a document prepared by the employer to show your salary & tax for the entire tax year.
3. P11D – P11D is a document which shows expenses incurred & the benefits taken by an employee in an organisation. For ex – Company car or health insurance.
4. Information about any redundancy or termination payment.
5. Certificates for any taxed award schemes.

In case you are not having P45, P60 or P11D form, contact your employer as early as possible.

In addition to it, you also need to keep details of other income or benefits you are getting from your job including –

1. Benefits you are getting from someone other than employer. For ex – Meal vouchers
2. Any tips received
3. Any lump sum payments not included in your P45 or P60.

Expense Records

In case you have paid for things like travel, tools or clothes provided by the company, you can claim these things in order to reduce your tax. You must keep record of all expenses in order to include them in your tax return.

Benefits Records

You must maintain the record of benefits provided by the company in relation to –

1. Statutory Sick Pay
2. Statutory Maternity Pay
3. Statutory Paternity Pay
4. Statutory Adoption Pay
5. Social Security Benefits
6. Job Seeker’s Allowance

Income from employee share schemes or share related benefits

You must maintain the following documents if you are earning income from employee share schemes or share related benefits –

1. Share option certificate copy & exercise notices
2. Details of any benefits you have received as an employee shareholder.
3. Details of share payments and the relevant dates.
4. Letter for any changes to your options

Savings, Investments & Pensions

You need to maintain all these records –

1. Interest income & statements from your savings & investments
2. Dividend vouchers from UK companies
3. Unit trust tax vouchers
4. Income details from a trust
5. Bank statement or building society statements & passbooks
6. Documents showing profit you earned from life insurance policies
7. Tax deduction certificates
8. Details of any other income you have received such as inheritance.

Pension information

It is very necessary for an individual to maintain these pension documents –

1. Form 60 – It is a document given to the individual by the pension provider every year.
2. Form P160 (Part 1A) – It is a document given to the individual when his or her pension starts.
3. Any other pension details and tax deductions

Rental Income

In the case of rental income, you must keep all these details specified below –

1. Rent amount
2. Date of letting out or leaving the property
3. Rent books
4. Receipts
5. Invoices
6. Bank statement
7. Earnings from the services you are providing to your tenants. For ex – Charges for repairs or maintenance
8. Expenses incurred by you to run the property. For ex – Cleaning or gardening services

Rules are defined for what you can & cannot claim as expenses in your tax return.

Read also: Expenses You Can Claim Back as an Employee

Capital Gains or Losses

In case you sell any asset whose price has gone up or increased after buying it, you may have to pay capital gains tax. Make sure you maintain the correct records in order to avoid fines, penalties and interest.

Overseas Income

You must maintain the following records of your overseas income –

1. Evidence of the income you have earned from overseas such as pay slips, bank statements or payment confirmation
2. Any expense incurred by you in overseas which you want to claim in order to reduce your tax bill
3. Dividend certificate you get from overseas companies.
4. Any other certificate or tax proof for which you have already paid in UK or overseas.

Related Topics

• Self Assessment Tax Return
• Sending a Self Assesment Tax Return
• Self Assessment Tax Return Deadline
• Self Assessment Tax Return Penalties
• Amend Self Assessment Tax Return
• Tax Return for Deceased Person
• File Your Tax Return Online
• Register for Self Assessment Tax Return
• Keep Your Tax Records
• Self Assessment Tax Bill
• Pay Self Assessment Tax Bill
• If you cannot pay tax bill on time
• If you do not pay your tax bill
• Claim a Tax Refund