---
title: "Record Keeping for Tax 2026/27: A UK Guide to HMRC Rules"
description: Effective record keeping is the foundation of tax compliance. For the 2026/27 tax year, all businesses and individuals subject to tax have a legal duty to keep accurate and complete records. Doing so not only ensures you can file a…
url: "https://www.accountingfirms.co.uk/knowledge-bank/record-keeping-for-tax/"
updated: "2026-08-11"
category: Self Employed Tax
---

# Record Keeping for Tax 2026/27: A UK Guide to HMRC Rules

Effective record keeping is the foundation of tax compliance. For the 2026/27 tax year, all businesses and individuals subject to tax have a legal duty to keep accurate and complete records. Doing so not only ensures you can file a correct and complete tax return but also protects you from penalties and makes managing your financial affairs simpler.

This guide explains the essential rules on what records to keep, how long you must preserve them, and the increasing importance of [digital record keeping under Making Tax](https://www.accountingfirms.co.uk/blog/helping-accounting-clients-move-to-the-cloud/) Digital (MTD).

## Why Good Record Keeping is Essential

You are legally required to keep records to complete your [tax returns](https://www.accountingfirms.co.uk/blog/role-of-accountants-in-mergers-and-acquisitions/) and demonstrate that the figures you submit are accurate. Good records allow you to:

- Prepare a correct and complete tax return.
- Provide evidence of your income and expenses if HMRC conducts a compliance check.
- Claim all the [tax reliefs](https://www.accountingfirms.co.uk/blog/role-of-accounting-in-crowdfunding-campaigns/) and allowances you are entitled to.
- Manage your business and [cash flow](https://www.accountingfirms.co.uk/blog/what-is-an-overhead/) more effectively.

Failure to keep or preserve adequate records can result in financial penalties.

## What Records Must You Keep?

HMRC does not mandate a specific record-keeping system, but your records must be sufficient to support the figures in your tax return. The exact records depend on the type of tax.

| Tax Type | Required Records |
| --- | --- |
| **Self Assessment (Income Tax)** | For businesses, this must include records of: • All sales and income (takings, fees). • All business expenses (cost of stock, travel, office costs). • For property income, records of rent received and property expenses. |
| **VAT** | You must keep: • A **VAT account**, which is a summary of your VAT for each period. • Copies of all VAT invoices issued and received. • Records of all business transactions, imports, and exports. |
| **Corporation Tax** | A company must keep all records needed to prepare its Company Tax Return, which includes details of income, expenses, assets, and liabilities. |
| **PAYE (for Employers)** | You must keep all documents relating to: • The calculation of your employees' pay. • Any deductions made. • Payments to HMRC. • Employee benefits and expenses. |

## How Long to Keep Your Tax Records

The retention periods for tax records vary depending on the tax and your circumstances. Keeping records for the correct period is a legal requirement.

| Category | Record Retention Period |
| --- | --- |
| **Self-Employed & Partnerships (Self Assessment)** | At least **5 years** after the 31 January submission deadline for the relevant tax year. For the 2026/27 tax year (deadline 31 Jan 2028), you must keep records until at least 31 January 2033. |
| **Companies (Corporation Tax)** | Usually **6 years** from the end of the accounting period they relate to. |
| **VAT-Registered Businesses** | Normally for **6 years**. This applies even if you deregister for VAT. |
| **Employers (PAYE)** | At least **3 years** after the end of the tax year to which they relate. |

These are minimum periods. If HMRC has opened an enquiry into your [tax return](https://www.accountingfirms.co.uk/blog/common-bookkeeping-mistakes-to-avoid/), you must keep the records until the enquiry is complete.

## The Rise of Digital Record Keeping

Under Making Tax Digital (MTD), many businesses are now required to keep and preserve records digitally.

### MTD for VAT

VAT-registered businesses must keep their records digitally using "functionally compatible software". This means software that can record and preserve digital records and submit returns to HMRC via its API platform. Your records do not have to be in a single program, but if you use multiple pieces of software (e.g., a spreadsheet and bridging software), they must be digitally linked.

### MTD for Income Tax Self Assessment (ITSA)

From April 2026, [self-employed individuals](https://www.accountingfirms.co.uk/blog/mtd-for-income-tax-what-small-businesses-need-to-know/) and landlords with qualifying income will need to comply with MTD for ITSA. This involves:

- Keeping digital records of all income and expenses.
- Using MTD-compatible software to send quarterly updates of income and expenses to HMRC.
- Submitting a final declaration for the tax year through the software.

Digital records for MTD can be preserved in any form, including storing scans of invoices, provided all the necessary information is captured.

## Penalties for Poor Record Keeping

HMRC can issue penalties if you fail to keep or preserve adequate records.

- **Standard Penalty:** The maximum penalty for a failure to keep or preserve records is **£3,000** for each failure (e.g., for each tax year).
- **HMRC Approach:** For a first-time, non-deliberate failure, HMRC will often issue a written warning rather than an immediate penalty. However, penalties are more likely in serious cases, such as the deliberate destruction of records or a history of failures.
- **MTD Penalty System:** The MTD regime uses a points-based system for late submissions. A taxpayer incurs points for missed deadlines, and a financial penalty of £200 is only charged once a points threshold is reached.

 

*For definitive guidance, refer to the relevant legislation, such as Section 12B of the Taxes Management Act 1970 for individuals and Schedule 18 of the Finance Act 1998 for companies. HMRC's Compliance Handbook (from CH10100) and VAT Notice 700/21 provide detailed operational guidance.*

## References

1. [Enquiry Manual - EM4650 - Penalties: Failure to Keep or Preserve Records: Approach at 1](https://www.gov.uk/hmrc-internal-manuals/enquiry-manual/em4650#:~:text=Enquiry%20Manual%20EM4650%20%2D%20Penalties,following%20terms%2C%20modified%20to%20fit&text=Enquiry%20Manual%20EM4650%20%2D%20Penalties,agent)%20in%20the&text=Failure%20to%20Keep,following%20terms%2C%20modified%20to%20fit&text=Failure%20to%20Keep,agent)%20in%20the)
2. [Compliance Handbook - CH10100 - Record Keeping: Overview at 1](https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch10100#:~:text=Compliance%20Handbook%20CH10100%20%2D%20Record,%26%206A%20EU%20directive%202006%2F112%2FEU&text=Compliance%20Handbook%20CH10100%20%2D%20Record,TMA70%2FSCH1A%2FPARA2A%20FA98%2FSCH18%2FPARA21%20VATA94%2FSCH11%2FPARA6&text=Keeping,%26%206A%20EU%20directive%202006%2F112%2FEU&text=Keeping,TMA70%2FSCH1A%2FPARA2A%20FA98%2FSCH18%2FPARA21%20VATA94%2FSCH11%2FPARA6)
3. [Compliance Handbook - CH11200 - Record Keeping: What records must be kept: Income tax, capital gains tax and corporation tax general requirements at 1](https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch11200#:~:text=Compliance%20Handbook%20%2D%20CH11200%20%2D,FA98%2FSCH18%2FPARA21%20Previous%20page%20Next%20page&text=Compliance%20Handbook%20%2D%20CH11200%20%2D,%20TMA70%2FS12B&text=Record%20Keeping,FA98%2FSCH18%2FPARA21%20Previous%20page%20Next%20page&text=Record%20Keeping,%20TMA70%2FS12B)
4. [Record keeping (VAT Notice 700/21) at 2](https://www.gov.uk/guidance/record-keeping-for-vat-notice-70021#:~:text=an%20electronic%20account%20%E2%80%94%20Your,systems%20will%20meet%20this%20requirement&text=an%20electronic%20account%20%E2%80%94%20Your,bookkeeping%20and%20computer&text=rights%20and%20obligations,systems%20will%20meet%20this%20requirement&text=rights%20and%20obligations,bookkeeping%20and%20computer)
5. [Record keeping (VAT Notice 700/21) at 2](https://www.gov.uk/guidance/record-keeping-for-vat-notice-70021#:~:text=for%20other%20taxes%2C%20but%20the,an%20invoice%20which%20contains%20some&text=for%20other%20taxes%2C%20but%20the,the%20term%20for&text=detailed%20rules%20as,an%20invoice%20which%20contains%20some&text=detailed%20rules%20as,the%20term%20for)
6. [Penalty Reform for Making Tax Digital for Income Tax Self Assessment volunteers at 5](https://www.gov.uk/government/publications/penalty-reform-for-making-tax-digital-for-income-tax-self-assessment-volunteers/making-tax-digital-volunteers-and-penalties#:~:text=and%20transitional%20provisions%20Under%20the,penalty%20regime%20is%20simpler%20and&text=and%20transitional%20provisions%20Under%20the,%20The%20new&text=new%20regime%2C%20when,penalty%20regime%20is%20simpler%20and&text=new%20regime%2C%20when,%20The%20new)
7. [Penalty Reform for Making Tax Digital for Income Tax Self Assessment volunteers at 3](https://www.gov.uk/government/publications/penalty-reform-for-making-tax-digital-for-income-tax-self-assessment-volunteers/making-tax-digital-volunteers-and-penalties#:~:text=are%20subject%20to%20the%20government%E2%80%99s,%20The%20measure%20will&text=are%20subject%20to%20the%20government%E2%80%99s,obligations%20arising%20in&text=reformed%20system%20of,%20The%20measure%20will&text=reformed%20system%20of,obligations%20arising%20in)