Taxation (UK) · The procedures relating to compliance checks, appeals and disputes

Record Keeping Requirements for Individuals and Companies

Updated 11 October 2026 · Fact-checked

Record keeping rules say how long tax records must be kept. Individuals with business or rental income keep them for five years after 31 January following the tax year; other individuals for one year. Companies keep them for six years from the accounting period end. Failure can cost up to £3,000.

Understand Record Keeping Requirements

HMRC can check a return after it is filed. To do that, it needs evidence. So the law makes taxpayers keep the records that support their returns. Without records, you cannot prove your figures and HMRC may not accept them.

The rules depend on who you are. Individuals with business or rental income (sole traders, partners, landlords) must keep records until five years after the 31 January filing deadline for the tax year. For 2025/26 the deadline is 31 January 2027, so you keep records until 31 January 2032. The period runs from the 31 January deadline, whatever date you actually file.

Other individuals (for example, employees with only savings or dividend income) keep records until the first anniversary of the 31 January filing deadline. For 2025/26 the deadline is 31 January 2027, so you keep records until 31 January 2028. This is not one year after the end of the tax year.

Companies must keep records for six years from the end of the accounting period. The VAT rule is also six years. Records include accounts, books, invoices, receipts, bank statements and the working papers behind the return.

Failing to keep or preserve adequate records can lead to a penalty of up to £3,000 for each tax year or accounting period. You can keep records in paper or electronic form. The exam tests the periods, the start date for counting, and the penalty.

Key rules to remember

Individual with business or rental income: Keep records until the 31 January filing deadline for the tax year + 5 years; This is five years after the filing deadline. For 2025/26 the deadline is 31 January 2027, so the date is 31 January 2032. That is about 5 years 10 months after the end of the tax year (5 April 2026). The five years run from the 31 January deadline, whatever the actual filing date.
Other individuals: Keep records until the first anniversary of the 31 January filing deadline for the tax year; For example, employees and investors with no business or rental income. For 2025/26 the deadline is 31 January 2027, so the date is 31 January 2028.
Companies: Keep records for 6 years from the end of the accounting period; Counted from the period end, not from the filing date.
VAT records: Keep VAT records for 6 years; Applies to registered traders.
Penalty for failure to keep records: Maximum £3,000 for each tax year or accounting period; This is a maximum. It applies where records are inadequate or not preserved.

How to solve Record Keeping Requirements questions

Use the same method for any record keeping question.

1Identify the taxpayer: individual or company, and whether the individual has business or rental income.
2Identify the period: the tax year (6 April to 5 April) or the company's accounting period end.
3For an individual, find the 31 January filing deadline that follows the end of the tax year. For a company, use the period end date.
4Add the correct time to that date: five years for business or rental income, one year for other individuals (the first anniversary of the 31 January deadline), six years for a company.
5Write the exact date out, not just the number of years.
6If failure to keep records is mentioned, state the maximum penalty of £3,000 per tax year or accounting period.
7If asked about the content, list the types of records: income, expenses, invoices, receipts, bank statements and supporting working papers.

Quickest way: Date-count shortcut

When to use it: Use this for objective test questions that ask for the last date to keep records.

Individual: write the 31 January after the tax year ends.
Add 5 years if there is business or rental income. Add 1 year if not.
Company: take the period end date and add 6 years.
Check the answer options for a date that matches. Watch for options that count from the tax year end or from the filing date.
If a penalty is asked, pick £3,000 as the maximum.

Common mistakes in Record Keeping Requirements

Counting five years from the end of the tax year instead of from 31 January after it
Students forget that the clock starts at the filing deadline.
Fix: Always go to the next 31 January first, then add the years.
Applying the five-year rule to all individuals
The rule is learned for traders and applied to everyone.
Fix: Check for business or rental income. Without it, the period is one year after 31 January.
Using five years for companies
Confusion with the individual rule.
Fix: Companies keep records for six years from the end of the accounting period.
Giving the wrong penalty, such as a percentage of tax
Students mix this with error and late payment penalties.
Fix: The record keeping penalty is a fixed maximum of £3,000 per tax year or accounting period, not a percentage.
Counting the company six years from the filing deadline
Students link it to the 12-month filing date.
Fix: Count from the end of the accounting period.

Worked examples

Example 1

Priya is a sole trader. Her tax return for 2025/26 is filed on 20 December 2026. State the date until which she must keep her records.

Show the solution

She has business income, so the five-year rule applies.
The tax year 2025/26 ends on 5 April 2026.
The 31 January following the tax year is 31 January 2027. This is the filing deadline.
Add five years: 31 January 2032.
The date she files does not change the answer.

Answer: Priya must keep her records until 31 January 2032.

Example 2

Rayner Ltd has an accounting period ended 31 March 2026. It did not keep adequate records. State how long it should have kept them and the maximum penalty. Also state how long Tom, an employee with only dividend income, must keep records for 2025/26.

Show the solution

A company keeps records for six years from the end of the accounting period.
Period end 31 March 2026 plus six years gives 31 March 2032.
The penalty for failing to keep adequate records is a maximum of £3,000 for the accounting period.
Tom has no business or rental income, so he keeps records until the first anniversary of the 31 January filing deadline.
The filing deadline for 2025/26 is 31 January 2027. Its first anniversary is 31 January 2028.

Answer: Rayner Ltd should keep records until 31 March 2032 and faces a maximum penalty of £3,000. Tom must keep his records until 31 January 2028.

Exam tips

In objective tests, work out the date in full. Wrong options are often built from the common counting errors.
Remember three numbers: 5 years and 1 year for individuals, 6 years for companies. Add £3,000 for the penalty.
In a Section C answer, name the taxpayer type first, then give the period and the date.
If a scenario mixes a trader with rental income, the five-year rule still applies. Do not split by source.
Link the topic to compliance checks. HMRC can only check what is kept, which explains why the rules exist.

Practice questions from The procedures relating to compliance checks, appeals and disputes

Record Keeping Requirements in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Record Keeping Requirements: frequently asked questions

How long must business records be kept for HMRC?

A sole trader or landlord must keep records until five years after the 31 January filing deadline for the tax year. A company must keep records for six years from the end of the accounting period. VAT records must be kept for six years.

What is the record keeping period for an employee?

An individual with no business or rental income must keep records until the first anniversary of the 31 January filing deadline. For 2025/26 the deadline is 31 January 2027, so this is 31 January 2028.

What is the penalty for failing to keep records?

The maximum penalty is £3,000 for each tax year or accounting period. It applies where adequate records are not kept or preserved. It is a fixed amount, not a percentage of tax.

Can records be kept electronically?

Yes. Records may be kept on paper or in electronic form. What matters is that they are complete, accurate and available for HMRC to check.