Paper Trails and Digital Dust: A Record Retention Calendar for Small Business

With 2026 drawing to a close, the finance drawer is probably fuller than it was in January. Receipts, payroll reports, VAT returns, maybe a curling copy of your insurance certificate. The question is not whether you can bin it all — it is what you can safely bin, and when. Think of this as your Knox Vault: a plain-English retention calendar for UK small businesses.

The simple rule: keep what HMRC can ask for

HMRC can ask to see business records to check a tax return. The exact retention period depends on the tax and the type of business. For a sole trader, the baseline is usually five years after the 31 January submission deadline for the relevant tax year. So if your 2025/26 Self Assessment return is due by 31 January 2027, keep those records until at least 31 January 2032. If you filed late or HMRC is checking a return, keep them longer.

For a limited company, tax rules usually mean six years from the end of the accounting period. Company law has its own rules — private companies generally need to keep accounting records for three years from the date they were made — but in practice six years is the safer tax-led default. Some company records, like the register of members and minutes of certain decisions, should be kept permanently.

The finance drawer: bookkeeping and accounts

Keep sales invoices, purchase invoices, bank statements, petty cash slips, credit notes and the working papers that show how your figures were put together. For a sole trader, that is the five-year rule above. For a company, aim for six years from the end of the accounting period. If you use cloud software, export a readable copy at least once a year — a PDF or CSV backup is not glamorous, but it is useful if a subscription lapses or a provider changes terms.

The VAT shoebox: six years, and digital

VAT records generally need to be kept for six years from the end of the accounting period they relate to. Under Making Tax Digital, you also need digital records of your sales and purchases, and digital links between those records and your VAT return. Keep the original invoices too, whether paper or scanned. A scanned copy is acceptable if it is legible, complete and a true copy. Do not rely on a photo that cuts off the VAT number.

The payroll folder: three years, but read the room

Payroll records — pay, deductions, sick pay, pension contributions and starter/leaver details — generally need to be kept for three years after the end of the tax year they relate to. That is the HMRC minimum. Many payroll providers keep them longer, and it is often sensible to do so, especially if you have staff who might query a pension or a P11D later. Employment contracts and related HR records are different: keep them for the duration of employment and usually six years after it ends.

The company cupboard: six years, plus the permanent stuff

For a limited company, keep accounting records for at least six years from the end of the financial year. That includes ledgers, contracts, invoices, stock records and the paperwork behind your statutory accounts. Keep company registers, share records and certain minute books permanently. If you use an accountant, ask what they already hold — but remember that you, as a director, are responsible for the company records.

CIS and subcontractors: three years

If you work in construction and deal with the Construction Industry Scheme, keep CIS records for three years after the end of the tax year. That means invoices, statements, verification details and monthly return information. If you are a subcontractor, keep your payment and deduction statements — they are your proof of income and tax deducted.

What format counts?

Digital is fine. HMRC accepts electronic records and scanned copies as long as they are complete and legible. Keep a backup that is separate from your main device, and make sure you can still open the files in five or six years. A folder of PDFs on a laptop that dies is not a record retention policy. A cloud folder with a local backup is better.

When is it genuinely safe to shred?

Shred when the longest relevant retention period has passed, when there is no open HMRC enquiry, no dispute and no insurance claim in progress. Use a cross-cut shredder for paper, and delete digital files securely — empty the recycle bin and remove old backups. If in doubt, keep it for another year. Storage is cheaper than a scramble.

Your pin-up retention calendar

• Self Assessment sole trader: five years after the 31 January filing deadline.
• VAT: six years from the end of the accounting period.
• Payroll: three years after the end of the tax year.
• CIS: three years after the end of the tax year.
• Company accounting records: six years from the end of the financial year.
• Company registers and key minutes: permanent.
• Employment contracts: duration plus six years.

Print it, stick it inside the finance cupboard, and review it each January. A tidy vault is not about keeping everything. It is about knowing exactly what you have, why you have it, and when you can let it go.