When it comes to keeping tax records for HMRC, there is no definitive list of exactly what documents you need to keep hold of. Furthermore, the requirements differ depending on the nature of your business. A good starting point is to consider the documents that HMRC send out to you. If you’re an employee, this will include things like your P45, your P60, P11D forms and any documents related to pensions. You should keep copies of these documents as part of your tax records.
Employees (such as company directors) also need to keep records for any benefits they have received, as well as records of income from employee share schemes or other share related benefits. They should also keep general financial records such as bank statements, statements of interest, records of dividends and any other ‘out-of-the-ordinary’ income such as inheritance.
Businesses should always keep records of all business expenses. These are important as some expenses may be tax deductible and therefore may reduce the amount of tax you owe. Records for expenses include things like receipts and invoices as well as other bills and contracts. Remember that if you work from home you may also be able to include the costs associated with this in your tax return, so accurate records of work from home expenses should also be kept.
If you are claiming a mileage allowance for business travel, then records of all journeys need to be kept which include dates, the distance travelled, addresses visited and the purpose of the business trip.
It is crucial that you keep records of your business income alongside your expense records, this could include income from rent, retail sales or money generated from elsewhere within your business, this also includes income generated overseas. This allows HMRC to see how much money your business has made which is vital in ensuring your tax calculations are accurate.