How long must one keep their UK tax records?
The UK personal tax records you must keep are determined by your tax status. The same also applies to how long you must keep these personal tax records It is not always necessary to keep your tax records, but doing so may save you money in the future. Having said that, it is critical to keep your personal tax records for at least three years following the tax year to which they pertain.
How long should my tax records be kept?
If you are a taxpayer, you must keep your records for at least one year and ten months (a total of 22 months). You may need to keep them for a longer period of time depending on the circumstances, such as if you are involved in a dispute with HMRC.
It is important to note, however, that personal records are subject to different tax laws depending on your current status. The records you must keep depend on whether you are:
- a civil companion
- widow or widower
- a housemate
- a business proprietor
- a landlord
- a tenant
- a trustee
- or as a trust beneficiary
In general, you must keep your records for six years after the end of the fiscal year in which they were created.
When you file your taxes also has an impact on how long you should keep your tax records. If you do it on time, you'll only need 22 months to keep them. However, if you are late in filing your taxes, you will need to keep your records for a much longer period of time.
If you are in a partnership or work for yourself,
If you are self-employed or in a partnership, your records should be kept for at least five years. For example, if you file your taxes for the 2019-2020 tax year by January 31st, 2021, you should keep your records until 2026. If you file your taxes late, this period is extended.
What kind of records should you keep?
It is entirely up to you how you keep your tax records because there are no rules. You can keep them on paper, in software, or digitally, whichever is more convenient for you. All you have to do is make sure they are accurate and simple to present whenever necessary. You may face a penalty if your tax records are incorrect. Furthermore, if you keep your records on a computer, ensure that both the back and front information is included. You are not required to keep hard copy records in this case.
What if you misplace your tax documents?
What if you've misplaced or destroyed your tax records? It's great that you're asking this question. And this is why It is critical to have a backup of your tax records. That way, If you misplace your paper records, you will still have digital copies of your tax records to use when necessary. You can locate and present new records on your computer, phone, the internet, an external hard drive, or a cloud backup service.
If you've lost your records and don't have a backup, do everything you can to find copies. For example, you can approach your bank and request copies of bank statements, as well as duplicate invoices, from your suppliers.
When you cannot recreate all of the required information, you are forced to use "estimations" or "provisional data" when filing your records. However, you must indicate in the "any other information" section that you do not currently have the documents to confirm these figures. If you use the word "provisional," it means you will receive the documentation later and confirm the figures you've provided. If you use "estimations," you will be unable to obtain documentation to confirm the figures.
Why keeping personal tax records is beneficial
Keeping personal tax records is a great way to always be ready for tax officials. With these records in place, they will never need to request a prepayment of money you may not have. This is also a great way to avoid penalties for not having your documents in order. Keeping your personal records saves you from being denied or delayed certain services when you need them.
Your accountant may require them to be able to rely on accurate information in order to calculate your tax bill. The documents may also be required for personal references. Whether you need your records for personal reasons or for tax purposes, it is critical to keep your personal tax records up to date.
Which documents must I keep?
Depending on the type of taxes involved, several documents must be kept. Keep your receipts and any other documents you've prepared that will be used to complete your self-assessment returns or rebates. You may require documents dating back several years at times. Here are some of the documents you must keep.
- Account statements
- Your credit card bills
- Any financial documents you obtained from a second job
- Any financial documents you created as a result of your side business
- Your work receipts and pay stubs
- Any other pertinent documents
Pensions, savings, and investments
Depending on the type of investment, your tax records for savings, investments, and pensions will differ. Investments and pension funds will require accurate and detailed records to be kept in order for the auditor to verify and substantiate your tax liabilities. You should keep orderly copies of financial transactions for yourself and any future audits.
- Accounts in a bank
- Annual pension statements
- Annual investment statements
- Annual reports on shares
- Annual reports from ISA
- Annual student loan statements
- Annual childcare statements
- Annual savings statements
- Annual property statements
- Annual Car Statement
Keeping track of student loans
Tax records are among the most important documents you must keep. They are required not only for income taxes, but also for social security, pensions, and other benefits. This is why it is critical to keep tax records for a minimum of six years. Without the original receipt, tax records are not considered legally binding. This is why it is always preferable to keep them.
What you need to do with these records is keep them organized. A good way to do this is to arrange them by year. Another option is to use the serial method, which involves organizing them numerically.
Keeping tax records for income tax purposes
Personal tax records in the UK must also be kept for up to 6 years. However, you can discard records that are less than three years old if they are no longer required. HMRC will notify you if they believe your records should be kept for more than 6 years. This is usually because there is a dispute with the tax office and they want you to keep them to strengthen their case.
Keeping mortgage records
If you have a mortgage on a property, you must keep records of the taxes you pay on it. This will assist you in claiming back tax if you qualify. Many homeowners are unaware that they can reclaim property tax if they overpay or qualify for rebates for other reasons. If you work with an accountant or tax advisor, they can help you figure out what you need to do.
The general rule of thumb for mortgage tax records is to keep them for three years. This allows accountants enough time to conduct audits and keep them on file in case of a dispute. Mortgage tax records in the United Kingdom assist those involved in understanding your mortgage agreement.
A summary of how long you must keep personal tax records in the United Kingdom.
In conclusion, you may keep your personal tax records for as long as necessary. If you must keep them for a longer period of time due to an audit, make them available whenever they are required. If you require them for your own financial records, you may keep them for as long as you require. You simply need to ensure that you are not violating any tax laws. If you are still unsure how to proceed with this subject, please contact PAYE so that we can assist you.
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