You are standing over a box of old invoices, wondering if today is the day you can finally let some of it go. Somewhere along the way you picked up a number, five years, six years, seven if you are being cautious, and you have never been quite sure which one is yours. That is not carelessness, and you are not alone in it. Nobody ever sat you down and said which clock applies to which business. Think of what you are keeping as a ledger of proof: the strands that let you stand behind your own numbers if anyone ever asks. The job is keeping the right strands for the right length of time, not everything, forever.
In a hurry? Find your situation:
- Sole trader or self-employed: keep records 5 years from the 31 January after the tax year they cover.
- Limited company: keep records 6 years from the end of your company’s financial year.
- VAT-registered (either structure): 6 years, same clock, with a hardship exception worth knowing about.
- HMRC has opened an enquiry: your normal clock pauses. Keep everything until it formally closes.
How long do you need to keep financial records?
There is no single answer, and that is the whole point of this guide. A sole trader needs to keep financial records for 5 years after the 31 January submission deadline of the relevant tax year. A limited company needs to keep its accounting and tax records for 6 years from the end of the company’s financial year they relate to. Those are two different clocks, started by two different events, and most of the confusion small business owners run into starts right here, applying the wrong one to their own situation.
If you are VAT-registered, the general rule is also 6 years, regardless of whether you trade as a sole trader or a limited company. And if HMRC has opened a compliance check into anything you have filed, your normal clock does not apply at all until that enquiry closes. Everything below unpacks each of those in turn, so you can see exactly which one is yours and why.
Sole trader or partnership? Here’s your clock
If you are self-employed or trading as a partnership, HMRC’s rule is that you keep your records for at least 5 years after the 31 January submission deadline of the relevant tax year. That anchor point catches people out: it is not your own accounting year end, and not the date you filed. It is the fixed 31 January deadline that follows the tax year the records belong to, whether you filed early or late.
The very-late-return exception
If you send a tax return more than four years after its deadline, the rule shortens rather than lengthens: HMRC asks you to keep those records for 15 months after you send the return. It is a narrow exception, but worth knowing if you are catching up on a return that has slipped, so you are not shredding something you still need or holding onto something you no longer do.
Limited company? Your clock is different, and the “3 years” figure is a trap
If you run a limited company, the rule most people half remember is wrong, or at least incomplete. HMRC requires you to keep accounting and tax records for 6 years from the end of the last company financial year they relate to, and longer still if a transaction spans more than one accounting period, if you bought equipment or machinery expected to last more than 6 years, if you filed your Company Tax Return late, or if HMRC has started a compliance check into that return.
Why “3 years” is the wrong number to rely on
Somewhere in the background of most of these conversations sits a real but misleading number: 3 years. That figure comes from the Companies Act 2006, which does allow a private limited company to destroy certain accounting records at the 3-year mark. It is a real law, just answering a different question. HMRC’s own compliance manual is direct about the overlap: tax law requires a private limited company to keep records longer, so the only ones it can destroy at 3 years are those it does not need for a company tax return. If a record still matters for your tax return, and most of the ones worth keeping do, 3 years never becomes the number that protects you. The 6-year rule is. Treat “3 years” as a fact about a different law, not a shortcut you can rely on.
When the 6-year rule runs even longer
The 6-year clock is a floor, not a ceiling. It extends for a transaction spanning more than one accounting period, for equipment or machinery the company expects to use for more than 6 years, for a Company Tax Return sent late, or for an open HMRC compliance check. See the table below for every business type and record type side by side.
The trap nobody warns you about: incorporating doesn’t reset your old clock
If you started as a sole trader and later incorporated, here is the part that catches even careful business owners: your old sole-trader clock does not merge into your new company’s clock, and it does not reset. It keeps running on its own schedule, the 5 years from 31 January that always applied to those years, entirely independent of the new 6-year clock that now applies to your company’s records. Two clocks, two starting points, both still ticking.
The worked example
Priya ran a sole-trader graphic design business for four years, keeping her invoices for exactly 5 years each, as HMRC’s self-employed rule requires. In her fifth year she incorporated and assumed the same 5-year habit carried over, so she shredded her oldest sole-trader invoices right on schedule. Eighteen months later, HMRC opened a compliance check reaching back into her final sole-trader year, whose own 5-year clock, running from the following 31 January, had not actually expired. She had conflated it with her new company’s 6-year clock and come up a year short for exactly the period under scrutiny. It is an illustrative pattern, not a real client case, but it is the exact shape of mistake this trap produces. If you have recently incorporated, confirm this against your own dates with a qualified accountant or HMRC directly, since the two clocks running side by side are easy to blur.
Which clock applies to you?
Find your row, then read the section above it for the detail.
| Business type / record | Minimum retention | Clock starts | Source |
|---|---|---|---|
| Sole trader / partnership, general records | 5 years | 31 January following the tax year | gov.uk, self-employed records |
| Sole trader, return filed 4+ years late | 15 months | Date you send the return | gov.uk, self-employed records |
| Limited company, accounting and tax records | 6 years | End of the company financial year | gov.uk, running a limited company |
| Companies Act 2006 minimum only (not the number to rely on) | 3 years, private company | Date record made | HMRC compliance manual, superseded in practice by the 6-year tax rule |
| VAT records, all VAT-registered businesses | 6 years | General VAT record-keeping rule | gov.uk, VAT record-keeping |
| Capital assets or equipment expected to last 6+ years | 6 years after disposal | Disposal date | gov.uk, running a limited company |
| Capital Goods Scheme items, land or buildings | Up to 10 years | Start of the adjustment period | gov.uk, Capital Goods Scheme |
| PAYE / employer records | 3 years | End of the tax year | gov.uk, PAYE for employers |
| Under HMRC enquiry | Until the enquiry closes, overrides the normal clock | Enquiry start | HMRC compliance manual |
VAT records follow their own 6-year rule
If your business is VAT-registered, whether you trade as a sole trader or a limited company, the general rule is that you keep all your VAT-related business records for at least 6 years. This clock runs on its own basis and does not shorten just because your underlying business structure has a different rule elsewhere.
If 6 years causes genuine hardship
HMRC allows some flexibility here: if the 6-year rule causes serious storage problems or undue expense, you can contact VAT general enquiries, who may allow certain records to be kept for a shorter period. It is a conversation to have directly with HMRC, not an assumption to make on your own behalf.
Digital records under Making Tax Digital
If your business falls under Making Tax Digital for VAT, your electronic VAT account needs to be kept digitally, in functional compatible software, for the same retention window as your other VAT records. MTD’s scope continues to evolve, so treat the specifics here as correct as of this guide’s last check, and confirm anything current against HMRC’s own published guidance.
Once you know what to keep and for how long, the next question most owners hit is a practical one: where does six years, or ten, of paperwork live without swallowing an office. Wigwam’s business storage is built for exactly that kind of archive, and you can get a price in a couple of minutes if you want to see what it would cost to move those boxes off your desk and somewhere secure.
What happens if HMRC opens an enquiry, does the clock still apply?
If HMRC opens a compliance check into a return you have filed, your normal retention clock is paused, not shortened. You need to keep everything relevant to that enquiry until it formally closes, regardless of what your usual 5 or 6-year rule would otherwise say. It is one of the few points in this guide that is genuinely simple: while an enquiry is live, nothing relevant to it goes in the shredder.
This guide is general information, not advice, and every business’s exact position depends on its own history and filings. If you have HMRC correspondence in front of you, or you are unsure whether a particular record falls inside an open enquiry, confirm your specific position with a qualified accountant or with HMRC directly.
The one case that runs longer: capital assets and property
If your company has bought equipment or machinery it expects to use for more than 6 years, that record’s clock runs for 6 years after disposal, not 6 years from purchase. For land and buildings under the VAT Capital Goods Scheme, the adjustment period can run for up to 10 years, and records need to evidence every adjustment across that full period. It is a less common case for most small businesses, but a real one if capital equipment or property sits on your books.
Keeping the paperwork without it taking over your office
Add it up, sole trader or company records, VAT records, capital asset evidence, and possibly an open enquiry on top, and most small offices were never built to hold that much paper for that long. That is usually when a compliance question becomes a space one.
What good storage for financial records looks like
Financial records just need somewhere clean, dry and secure, with access you control, not decades of climate engineering. Wigwam’s storage sites are unmanned, so if a courier is dropping off or collecting archive boxes on your behalf, someone from your business needs to be there to meet them. Access runs 6am to 10pm, seven days a week, through smart entry, so you can get in and out on your own schedule without booking a slot with reception.
This is general information, not a substitute for professional advice. Confirm your own retention dates and edge cases with a qualified accountant or HMRC directly, using the gov.uk guidance linked throughout as your own starting point. Once you know what to keep, Wigwam’s business storage is a straightforward place to put it, and you can get a price whenever you are ready.
If you are a regulated practice, a firm of solicitors or accountants holding records on behalf of clients rather than your own business, the rules and the retention periods are different. See our guide to records retention for solicitors and accountants instead.
Frequently Asked Questions
For most business records, clear scans are acceptable, and HMRC’s VAT guidance specifically allows electronic record-keeping as long as the records remain complete and legible for the full retention period. The key test is legibility: if a scan is faded, cropped, or unreadable when HMRC asks for it, it will not stand in for a proper original.
If you destroyed a record after its correct retention period had genuinely passed, and you were not under an open enquiry that covered it, you are not required to have kept it. The risk sits entirely in the timing: destroying something before its clock has actually run out, or during a live enquiry, is the situation to avoid, which is exactly why getting the right clock matters more than a rough guess.
No. A sole trader’s original 5-year clock, running from the 31 January after each tax year, keeps going on its own schedule for the years you traded as a sole trader. Your new limited company’s 6-year clock is a separate obligation that starts from your company’s own financial year end. Neither one replaces or absorbs the other.
The same retention rules that applied while you were trading continue to apply after closure. A sole trader’s records still need to be kept for 5 years from the relevant 31 January deadline, and a limited company’s records still need to be kept for 6 years from the end of the financial year they relate to, even once the business itself has stopped operating.
