New Tax Year: a Great Time to Review What Information to Store, and for How Long

This month (April 5, 2025, to be eaxct) sees the end of the old tax year and the start (April 6th 2025) of the current tax year- The deadline for the final PAYE submission for 2024/25 (April 19th 2025), and penalties for unfiled self-assessment tax forms start to be applied from the end of April.

Different businesses have different needs, but every business needs to keep business records and year end tends to highlight the fact.

These records show and explain the company's transactions in order to be able to disclose accurately, at any time, what the company’s financial position is, and to allow accounts to be compiled.

The added advantage is that the offer a historic view and may help in any legal disputes and negotiations. Detailed records can also help build trust for investors.  Similarly, auditors appreciate having historical data to give them a full picture.

The march toward making tax digital is well and truly underway, so companies will need to decide what to digitise, and whether they also want to keep original documents.

As storage specialists, Pink Storage has compiled a list of the kinds of information you should be keeping as a business, and for how long. Information here is aimed at small companies. (If you are running a business as self-employed, the rules are different.)

This information ncludes:

·       Financial/Tax records

·       Contracts

·       Details of any assets

·       Stock records

·       Company information (regulatory/legal)

·       Employment and Payroll records

Please note: business finance and keeping to rules and regulations is both variable by sector and subject to change. This blog has been created to help you decide, generically, what you need to store, and whilst every effort has been made to ensure its accuracy, you should seek expert advice (legal and financial) to ensure your business meets the legal requirements, particularly those specific to business sector.

Summary charts showing ideal time to keep records have been provided, but in case of an ongoing investigation by HMRC or law enforcement, records must be kept until the end of the enquiry.

Financial/Tax records to retain

No matter what size your business, it would be a miracle to find you had no expenses.

Though you won’t need to provide any evidence with a tax return, HMRC may make a request at any time for evidence to ensure the correct tax payment, so keeping records, safely and accurately, is vital.

Accounting records must contain daily entries of all money received and spent by the company (“the matters in respect of which the receipt and expenditure takes place”).

Things that companies should therefore keep include:

• Bank records
• Receipts
• Invoices
• Petty cash records
• Details of money purchases
• Other proofs of sales and expenditure

All money received and spent by the company needs recording (and keeping), including  grants, contracts (see below), sales books, till rolls and anything received on government schemes such as COVID support.

In short, anything that backs up (proves) what’s been declared in the accounts/bookkeeping records ought to be kept. This includes any financial records, information and calculations used to prepare and file the annual accounts/Company Tax Return.

Failing to keep accounts records correctly can result in an HMRC fine of £3,000. However, if poor record keeping also means an under-declaration of profit, HMRC maycharge penalties (as well as late payment interest) for any consequently undeclared tax/ National Insurance contributions.

Consequently, it pays to keep copies of annual accounts and tax returns (including VAT returns) and justifications for the data in them.

Contracts

All supplier and customer contracts should be kept for six years after the contract has ended. Legally, actions from a contract can be brought up to 6 years from any breach. For contracts which are ‘deeds’ the term is 12 years.

Where the business uses standard terms and conditions of sale (these are effectively a contract of sale) a record should be kept and stored by version number/date.

Lease agreements for commercial premises must also be kept.

Asset Records

If the company has bought something that it expects to last, like equipment or machinery, buildings etc, (a company asset) records of the purchase should be kept for as long as the asset lasts (or a minimum of six years).

Along with the asset’s details, maintenance logs, upgrade details, and any depreciation calculations should be kept. This is not just good practise for tax purposes – good records can sometimes help to gain a higher price when the company is sold and help if claiming any tax relief upon disposal.

Stock Records

Companies which buy or make stocks for selling must declare annually what stock the company owns at the end of the financial year, and details of the stock taking method used to collate this stock figure.

Unless running a retail business, records of who things were bought from (suppliers) and sold to must also be kept. Import and export information should also be kept.

This can all be challenged by HMRC, so it’s important to keep whatever you can to back this up, including any order details and delivery notes/proof of delivery.

Company Information to Keep/Store

Company information that must be kept includes:

Financial

When forming a limited company in the UK, incorporation documents are issued. Companies should keep copies of these documents (but they can also be found on the Companies House search service).

Statutory books (registers)

Registers store key information about the people who own, control, and manage the company. The following registers must be kept, as appropriate:

• charges (any securities a company offers for a loans including mortgages)
• company secretaries
• directors (and their usual residential addresses, although this does not have to be available publicly)
• ‘instruments’ (usually loan agreements or mortgage deeds that create a charge
• ‘members’ (shareholders or guarantors) and debenture holders
• people with significant control (called a PSC register)

Operational Information

Copies should be kept of:

Directors’ service contracts and any indemnities (company commitments to pay claims/ legal costs if the company is at fault if something goes wrong.)

Company resolutions

Minutes of meetings (general ‘members’ meetings and board meetings)

Share transactions (SH01s) and transfer trails when shares pass from one person to another, including when the company redeems or buys back issued shares

Financial forecasting/variance reports

Senior executives’ records (that is, those on a senior management team or their equivalents)

Employment and recruitment records to Retain

For all unsuccessful applicants, application forms and interview notes should be held for at least six months, ideally a year because time limits for bringing discrimination claims can be extended. (Successful job applicants documents will become parts of their personnel/employee files.)

For each employee, records should be kept including:

• Contract
• Any further agreements about employees’ working hours, pay, and conditions
• Leave (time off/holiday/compassionate leave etc agreed)
• Sickness absences
• Pension schemes and payroll giving schemes
• Taxable benefits
• Expenses, including taxable expenses

(See also Health and Safety, below)

If a worker is not legally entitled to the minimum wage, evidence of this must be recorded and kept.

Employment records must also show accurate reporting to HMRC. You must keep them for at least three years from the end of the tax year to which they relate.

Payroll records

Records must be kept for:

• Employee pay (including salary/wages and statutory payments like Maternity Pay or Statutory Sick Pay.
• All deductions made including income tax, NI contributions, pension contributions and Student Loan repayments.
• Tax code notices
• Payroll Giving Scheme documents
• Taxable expenses

(See also Pensions, below)

Companies should also keep copies of the reports sent to HMRC including Pay As You Earn (PAYE), Full Payment Submissions and Employer Payment Summaries; and, of course, the associated HMRC payments

Records proving that the company is paying at least the minimum wage need to be kept, unless exemptions apply, in which case this must be evidenced.

Retaining Pensions Information

Pensions information is so important to record in the current climate.

This includes:

• Pension scheme investment policies
• Meetings and decisions
• Documents about the scheme including trust deed and rules including any deeds of amendment or rule changes
• Member and beneficiary information
• Details of all contributions and payments to and from the scheme
• Payments to advisers/the employer
• Transfers of members’ benefits and related assets (both to and from the scheme)

The Pensions Administration Standards Association offers solid guidance on what should be kept: good pensions schemes rely on good data, which has to be balanced with people’s rights regarding holding that data:  https://www.pasa-uk.com/data-management-plans-guidance-march-2021/

Health and Safety Record Retention

Records that should be kept include

• All assessments under health and safety regulations, and any records of consultations with safety representatives/committees
• Dated copies of health and safety manuals
• Incident investigations
• Risk assessment details/records including fire safety, noise surveys, hand/and arm vibration exposure
• Employee information including manual handling assessments, training and development, occupational health records, exposure to biological agents
• Reportable injuries, diseases and dangerous occurrences
• Information supplied to contractors
• Plant and equipment/machinery: technical files and maintenance records (See also assets, above)
• Details of hazardous substances that fall under COSHH (Control of Substances Hazardous to Health) or DSEAR (Dangerous Substances and Explosive Atmospheres Regulations) regulations; and asbestos at work assessments and surveys; and details of hazardous waste disposal.
• Procedural records.
• Hazardous Waste disposal.
• Accident record book
• All assessments under health and safety regulations, and any records of consultations with safety representatives/committees

GDPR

We cannot talk about storing personal information without also talking about GDPR ( general data protection regulation), the set of rules which governs what information we can keep about individuals.

The ICO offers solid information on handling records, particularly that of employees and contractors, which are legally, of course, considered ‘data’: https://ico.org.uk/media/for-organisations/uk-gdpr-guidance-and-resources/employment/keeping-employment-records-0-0.pdf

Next steps

·       Keep an eye on the Pink Storage blog for more hints and tips on document storage

·       See how to store paper documents safely: Paperwork storage

·       Find out how much dry, secure  self-storage will cost by asking for a quote (online): https://www.pinkstorage.co.uk