What’s the importance of record keeping? Statutory authority: The Income Tax (Employments) Regulations 1993 (SI 1993/744) as amended, for example by The Income Tax (Employments) (Amendment No. Subscribe to our monthly newsletter and follow us on social media. If you sent your 2018 to 2019 tax return online by 31 January 2020, you must keep your records until at least the end of January 2025. There are some situations when limited companies need to keep records for longer, if: Businesses need to keep records of their income and expenses, but the rules are different depending on your legal structure. Find out the answers below. .css-1c42vd{color:#262626;-webkit-text-decoration:none;text-decoration:none;cursor:pointer;color:#007478;-webkit-text-decoration:underline;text-decoration:underline;}.css-1c42vd:hover{color:#007478;-webkit-text-decoration:underline;text-decoration:underline;}Read our full disclaimer. 6) Regulations 1996 (SI 1996/2631). Recommendation . Your email address will be used by Simply Business to keep you posted with the latest news, offers and tips. You should keep all of your tax records … ... records . HMRC says that as long you send your tax return on time each year (that is before January 31st of the following year), you’ll only need to keep records for the last 15 months. So it’s really important to have an effective filing system for all your business records. Example Some people keep tax records and supporting documentation for life, others don't keep the records past the next tax year. This means that you should keep all records for the tax year ended 5th April 2020 until at least the end of January 2022. HMRC may check your records to make sure you’re paying the right amount of tax. HMRC keeps individual records from tax year 1975/1976 onwards. Learn how long to keep your tax returns, and all the documentation that justifies your deductions and expenses. These include: You should have all the records needed to file your company tax return, including: If your records are lost, you need to try to recreate them. These include notices of tax codes, payments to employees and to HMRC, details of employee sickness and leave, any taxable expenses or taxable benefits. HMRC lists the records that sole traders need to keep. The IRS can request six years’ worth of financial records. If your company or organisation does not keep adequate records for Corporation Tax purposes, or does not retain records for long enough, you may be charged a penalty of up to £3,000. If you are self-employed you need to keep your records for five years from 31 January following the tax year for which the tax return is made. If you are a business owner If you are running a company, you must keep your tax records for at least six years from the end of the last financial year. For example, some apps let you scan and upload your receipts. There are 3 main milestones for how long you should keep old tax records before shredding: 1 year, 3 years, and 6 years. SSP records: There is no longer a need for employers to keep records of statutory sick pay (SSP) that has been paid. Why not take a look now and build a quick, tailored quote? You must keep your records for at least 5 years after the 31 January submission deadline of the relevant tax year. HM Revenue … In short, you should keep every tax return and the supporting forms you used to fill it out. If you cannot replace your records, you must do your best to provide figures. You’ve got to plan for the seasonal lulls and…. There’s accounting and invoice software available that can automate some of these tasks and keep your records in one place. If you are self-employed, you must keep your records for at least five years after the 31 January submission deadline of the relevant tax year. Check if you should set up as one of the following instead: You can register a trade mark if you want to stop people from trading under your business name. They include: And if you use traditional accounting there’s more records you need to keep, like what you’re owed but haven’t received yet, as well as how much you’ve invested in the business over the year. We also use cookies set by other sites to help us deliver content from their services. You can unsubscribe from these emails at any time. If you are a limited company owner, you should keep all your business-related tax records for a minimum of 6 years from the end of your current accounting period. Public liability or professional indemnity insurance. Health and Safety Executive . It will take only 2 minutes to fill in. You can change your cookie settings at any time. That’s because the limited company legal structure is more complex, as it’s a separate entity. ... T. 020 7697 2595 E. info@pre-school.org.uk W. www.pre-school.org.uk. To pay tax, you'll need to register for Self Assessment. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return. While limited company directors will need to file a Self Assessment tax return, as described above, they’ll have more responsibilities than sole traders when it comes to record keeping. As well as information about the company, you need to keep financial and accounting records. HM Revenue and Customs (HMRC) may check your records to make sure you’re paying the right amount of tax. For as long as possible . Residents of the Devon town reacted with such…, December’s already a stressful time of year for small business owners and the self-employed. As one of the UK's biggest business insurance providers, we specialise in public liability insurance and protect more trades than anybody else. Share this: Click to share on LinkedIn (Opens in new window) Working time records, e.g. Not only do accurate records mean you’ll pay the right amount of tax, they can also keep you out of trouble in the event of an HMRC tax investigation. So if you filed your 2018-19 tax returns ready for the relevant deadline on 31 January 2020, you’ll need to keep your records until 31 January 2025. The IRS statute of limitations for auditing is three years. However it is advisable to keep records of employee sickness absence. they show a transaction covering more than one of the company’s accounting periods, the company has bought something that should last more than six years (like equipment), HMRC is investigating your company tax return, you record income and expenses by the date you invoiced or were billed, so if you’re billed on 25 March 2020 and don’t make the payment until the end of April 2020, you record the expense for the 2019-20 tax year rather than 2020-21, this is more suited to larger businesses, or businesses that expect fast growth (you can only use cash basis accounting if your turnover is £150,000 or less a year), you record income and expenses by the date you receive a payment or pay a bill, so if you invoice a customer on 27 March 2020 and don’t get the payment until the end of April 2020, you record the income for the 2020-21 tax year, you only use this method if your turnover is £150,000 or less a year, and it’s useful for smaller businesses because you won’t be taxed on income you haven’t received, details of personal income (for example from savings, investments and rental income), keep your personal and business bank accounts separate – here are the, reconcile your accounts at least once a month – your income and expenditure records need to match up with your financial statements, spend time creating and maintaining your filing system – you can break your paperwork down by year, quarter or month, depending on what works for your business (but the important thing is to stay on top of filing and don’t procrastinate), directors, shareholders and company secretaries, debentures (promises to repay a loan at a future date), indemnities (payments to make when things go wrong and it’s the company’s fault), loans and mortgages secured against the company’s assets, more than 25 per cent of shares in the company, more than 25 per cent of voting rights in the company, the right to appoint or remove the majority of the board of directors, details of debts the company owes or is owed, stock the company owns at the end of the financial year, stocktakings used to work out that figure, all goods bought and sold (and who from and to), income (including profits, trading losses brought forward, property income), profits before other deductions and reliefs, Making Tax Digital: a guide for small businesses and the self-employed, 10 ways to claim tax relief for small businesses. If you send your tax return more than 4 years after the deadline, you’ll need to keep your records for 15 months after you send your tax return. Always take professional advice. Generally, you must keep your written evidence for five years from the date you lodge your tax return. While most tax records need to be retained for at least three years, you should keep some tax records for at least six years. You might need to register in a different way if: Don’t include personal or financial information like your National Insurance number or credit card details. If paperwork isn’t your strong point, don't be an ostrich. If you have mislaid any of your statements, you can ask your bank to provide them, but it may charge anything from £2.50 to £10 for each statement. You need to have the documents they ask for. Hiring professionals like accountants and bookkeepers can be useful – but make sure you do your research and only work with people who have a good reputation. If you run a company, it’s five years after the 31 January following the … Here’s a simple guide for how long to keep tax records in the UK: Self-employed/partnership– If you’re self-employed or running a business partnership, you should keep your records for a minimum of five years after the 31 January submission deadline for the relevant year. Simply Business .css-1taegbl{color:#262626;font-size:13px;margin-top:4px;-webkit-text-decoration:none;text-decoration:none;cursor:pointer;color:#007478;}.css-1taegbl:hover{color:#007478;-webkit-text-decoration:underline;text-decoration:underline;}Privacy policy. All Rights Reserved. If you do end up losing your records, you need to tell HMRC whether you’re using estimated figures or provisional figures when filling in your tax return. You need to keep your accounting records for longer – six years from the end of the last company year they relate to. How long do you need to keep tax records for in the UK? Tax Day 2020 is July 15th. There are some more specific situations. If you run a limited company and need to file a company tax return, there are more rules and regulations. Spread the word. One way to minimise … Find out how long you are required to keep those annoying old tax returns. While professionals are often expensive, they free up your time so you can focus on running your business. To help us improve GOV.UK, we’d like to know more about your visit today. These include: You should also have a register of ‘people with significant control’ (PSCs). Three Years. Provisional figures are best estimates while you wait for the actual figures. Simply Business - Insurance for your business. Go online. Previous : Overview Next : Employees and limited company directors As established, there’s lots of information you need to keep – HMRC says you should also keep proof alongside your records, including all receipts (for goods, stock, and expenses), bank statements, cheque stubs, sales invoices, till rolls and bank slips. Keeping tax records after the death of a loved one will protect the estate in the event of a later audit, but you do not need to hold on to every single document. Income tax and National Insurance returns/records ; At least 3 years after the end of the tax year to which they relate . Find out more about keeping tax records for your business – download your free guide today. They could show up at any time. 6th Floor.css-yshh9l{display:block;height:10px;}99 Gresham StreetLondonEC2V 7NG, Sol House29 St Katherine's StreetNorthamptonNN1 2QZ. If you don’t keep accounting records, you can be fined £3,000 and disqualified as a company director, so it’s important you do this correctly. If we were to enquire into your records and ask for evidence then you would need to be able to provide these. With the breadth of business records that limited companies need to keep, it’s important to have an effective system in place. Tell your Corporation Tax office straight away and mention it in your company tax return. You must keep PAYE records for three years from the end of the tax year to which they relate. So if you filed your 2018-19 tax returns ready for the relevant deadline on 31 January 2020 , you’ll need to keep your records until 31 January 2025 . PSCs are likely to be people who have: If you don’t keep your records in the same place as your registered address, you have to tell Companies House. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). How long to keep your records You must keep your records for at least 5 years after the 31 January submission deadline of the relevant tax year. A new Simply Business survey reveals that local shops and businesses are expecting a significant hit to their earnings this Christmas, with…, Last month Costa Coffee suffered an embarrassing defeat at the hands of Plus, they can advise on record-keeping and your overall tax liabilities. Tell HMRC when you file your tax return if you’re using: There are other ways to work for yourself. If you are keeping records used to complete a personal (non-business) Self-Assessment tax return, you must keep records for 22 months from the end of the tax year to which they relate. Records such as birth and death certificates, marriage licenses, divorce decrees, Social Security cards, and military discharge papers should be kept indefinitely. You have to keep your records for at least five years from 31 January following the tax year that the tax return relates to. What happens if … Employment Tax Records: Keep for at least four years after the tax is paid or is due. How long to keep tax records? If your return was late, keep records 15 months after the date it was submitted or, for business income, for five years and ten months after the tax year end if this is later. This should make everything easier when it comes to the tax-year end. So for example for the 2019/20 tax return the following 31 January will be 31 January 2021 – you must keep your records until 31 January 2026. What’s more, business owners are required to keep tax records for a certain number of years. As long as the tax return is filed by 31 January after the end of the tax year to which they relate, records need only be maintained until the following 31 January (i.e. You need to keep the records for six years after the end of the relevant financial year. With regards to Self-Assessment, the modern iteration of the Self-Assessment system began in tax year 1997/1998, and you can obtain copies of completed returns for that year onwards by contacting the Self-Assesment department either by webchat on gov.uk or by calling 0300 200 3310 (open 8am to 8pm Monday to …
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