How Long Should You Keep Accounting Records in the UK? A Guide to Going Digital

Receipts in drawers, invoices in folders and bank statements gathering dust may once have been a normal part of running a business. Today, however, more businesses are moving towards digital bookkeeping – and changes such as Making Tax Digital are making good digital record keeping increasingly important.

But going digital does not mean you can simply throw away every old financial record.

Businesses still have responsibilities around what accounting records they keep, how long they retain them and, in some circumstances, how those records are stored.

So, how long do you actually need to keep your accounting records in the UK, and how can you safely move from paper to digital records?

At Blue Rocket Accounting, we help businesses manage their bookkeeping and accounting obligations while making their financial processes as straightforward as possible. Here is what you need to know.

Jump to How to Digitise Your Accounting Records>>

How Long Do You Need to Keep Accounting Records?

There is no single retention period that applies to every accounting record or every type of business.

The rules depend on factors including whether you operate through a limited company, are self-employed, are VAT registered or employ staff.

Limited Companies

HMRC guidance states that limited companies should generally keep their accounting records for six years from the end of the last company financial year they relate to.

You may need to keep records for longer if, for example:

• a transaction covers more than one accounting period;
• the company has purchased something expected to last for more than six years, such as certain machinery or equipment;
• your Company Tax Return was submitted late; or
• HMRC has started a compliance check into your Company Tax Return.

Your company records should provide sufficient information to show the company's financial position and allow its annual accounts and Company Tax Return to be prepared correctly.

This includes records of money received and spent, assets, liabilities and, where applicable, stock and goods bought and sold.

Supporting financial documents can include invoices, receipts, bank statements, contracts, orders, delivery notes and relevant correspondence.

What About the 'Seven-Year Rule'?

You may have heard businesses or accountants recommend keeping financial records for seven years.

However, seven years is not a universal HMRC rule for accounting records.

For limited companies, the general HMRC requirement is six years from the end of the relevant company financial year.

Some businesses may choose to retain records for longer than the statutory minimum as part of their own record-retention policy, provided they also consider their data-protection obligations.

The important thing is not to assume that one retention period applies to every document. Different records can have different requirements.

How Long Should Sole Traders Keep Their Records?

The rules are slightly different if you are self-employed.

HMRC says you generally need to keep your business records for at least five years after the 31 January submission deadline for the relevant tax year.

For example, records used for a tax return submitted by the normal 31 January deadline will need to be retained for a further five years after that deadline.

These records help you calculate your business profit or loss and provide evidence to HMRC if it asks to check your tax return.

They can include records of:

• sales and other business income;
• business expenses;
• receipts and purchase invoices;
• bank statements;
• VAT records, where applicable;
• PAYE records if you employ people; and
• information relating to personal income used to complete your Self Assessment return.

How Long Should You Keep VAT Records?

If your business is VAT registered, HMRC generally requires VAT records to be retained for at least six years.

There are exceptions. For example, records relating to the VAT One Stop Shop (OSS), or the former Mini One Stop Shop (MOSS), generally need to be retained for ten years.

VAT-registered businesses are also subject to Making Tax Digital for VAT requirements unless they are exempt. This means certain VAT information must be maintained digitally using compatible software.

What About Payroll Records?

Employers have separate PAYE record-keeping requirements.

HMRC states that PAYE records generally need to be retained for three years from the end of the tax year they relate to.

These include information about employee pay and deductions, reports and payments made to HMRC, tax codes, employee leave and sickness absences, and taxable expenses or benefits.

Other employment legislation may require particular records to be retained for different periods, so payroll records should not automatically be deleted simply because the PAYE retention period has passed.

Can I Digitise My Paper Accounting Records?

In many circumstances, yes.

HMRC permits records to be kept on paper, digitally or using bookkeeping software, provided the records remain accurate, complete and readable.

HMRC's guidance also allows information from many original documents to be preserved digitally where an exact, complete and legible copy has been made.

That means a business can potentially scan documents such as receipts and invoices and retain electronic copies rather than filling cupboards with paperwork.

However, there are exceptions where an original document may still need to be retained. You should therefore check before destroying an original document simply because it has been scanned.

How to Digitise Your Accounting Records

Moving years of paperwork online can sound daunting, but it becomes much easier with a clear system.

1. Decide What Needs to Be Kept

Before scanning everything in sight, establish which records are still within their required retention period.

Older documents may no longer need to be retained, while some records may need to be kept for longer because of their particular circumstances.

If you are unsure, speak to your accountant before destroying anything.

2. Scan Paper Documents Clearly

Receipts, invoices and other supporting documents can be scanned or photographed, provided the resulting copy captures all of the relevant information and remains readable.

Make sure the whole document is captured. If important information appears on the reverse, that should be copied too.

3. Use a Consistent Filing System

A folder full of files called IMG_4728.jpg is not much of an improvement on a drawer full of receipts.

Use clear file names and organise records logically by financial year, accounting period, supplier, customer or document type.

Good bookkeeping software can make this considerably easier by attaching documents directly to the relevant transactions.

4. Keep Digital Records Secure

Financial records can contain sensitive business and personal information, so appropriate security is essential.

Consider secure cloud storage, access controls and suitable backup arrangements.

You should also make sure that records will remain accessible throughout the required retention period. HMRC guidance makes clear that if records are stored electronically, you need to be able to reproduce the information in a satisfactory and legible form when required.

This is particularly important if you change bookkeeping systems or software providers.

5. Don't Destroy Paperwork Until You're Confident

Once records have been digitised, check that each electronic copy is complete, readable and stored safely before disposing of the paper version.

And remember: some original documents may still need to be retained.

If you are unsure whether a particular original can be destroyed, check first.

Making Tax Digital Makes Digital Record Keeping Even More Important

Digital bookkeeping is no longer simply about reducing paperwork.

Making Tax Digital for Income Tax is now in effect for some sole traders and landlords.

From 6 April 2026, individuals with qualifying self-employment and property income of more than £50,000 are required to use Making Tax Digital for Income Tax, unless an exemption applies.

Under the current timetable, this expands to those with qualifying income of:

• more than £30,000 from 6 April 2027; and
• more than £20,000 from 6 April 2028.

Those within Making Tax Digital for Income Tax need to use compatible software to create and store digital records of their relevant self-employment and property income and expenses and send quarterly updates to HMRC.

For each relevant digital income or expense record, HMRC requires information including the amount, date and appropriate income or expense category.

VAT-registered businesses are already familiar with digital record keeping, as Making Tax Digital has applied to all VAT-registered businesses since April 2022, unless exempt.

Do I Still Need Receipts Under Making Tax Digital?

Yes – Making Tax Digital does not mean that supporting evidence suddenly becomes unnecessary.

HMRC states that people using Making Tax Digital for Income Tax must continue to keep the original records or supporting documents, or copies of them, that they have used to prepare their tax return, such as invoices and bank statements.

The difference is that the relevant income and expense information must also be recorded digitally within compatible software.

Why Digitise Your Accounting Records?

Even where you are not currently required to keep a particular record digitally, there can be significant practical advantages to doing so.

Digital bookkeeping can make it easier to:

• find invoices and receipts when you need them;
• reduce paperwork and physical storage;
• keep your financial information organised;
• provide information to your accountant;
• maintain more up-to-date financial records;
• spot missing information or bookkeeping errors sooner;
• prepare for Making Tax Digital requirements; and
• back up important business records.

Most importantly, good digital bookkeeping can give you a clearer picture of what is happening financially within your business.

Instead of waiting until the end of the year to organise a pile of paperwork, maintaining accurate records throughout the year can help you understand your income, expenditure and cash flow as you go.

Ready to Leave the Paperwork Behind?

Digitising your books does not have to mean spending a weekend scanning seven years' worth of receipts.

The key is understanding what you need to retain, what can safely be digitised and how to create a system that makes managing your accounts easier going forward.

At Blue Rocket Accounting, we work with business owners to make bookkeeping and accounting simpler, helping you maintain accurate records and stay on top of your responsibilities without unnecessary paperwork.

Whether you need help moving your bookkeeping online, preparing for Making Tax Digital or simply getting your records back under control, our team is happy to help.

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