In the UK, comprehensive record keeping is required for employees and company directors to accurately report income, taxes, expenses, and other financial details. This article will overview key documents employees and directors need to retain for HMRC reporting and filings.

For Employees

If you are an employee receiving income from wages, salaries, bonuses or other earnings, you must keep sufficient documentation on all the amounts. Key records include:

• P60 forms – Issued annually by your employer, summarising pay and tax deductions for the year.
• P45 forms – Provided when leaving a job, showing earnings and tax paid until that point.
• Payslips – Either paper or digital payslips provided each pay period detailing your gross and net income along with all deductions.
• Bonus and commission statements – Documents showing any additional bonus or commission amounts paid during the year.
• Receipts for business expenses – Detailed receipts for any work-related expenses you hope to claim for deductions.
• Mileage logs – Written mileage logs for business driving if deducting car expenses under HMRC-approved mileage allowance rules.
• Bank statements – Personal bank account statements to cross-reference and confirm income deposits.
• Tax vouchers – Issued for benefits under salary sacrifice schemes and other special taxable benefits provided through employment.
• Share scheme and share option documents – Provided by the employer detailing any employment-related share awards, options, or other share-based benefits.

These core income records for employees help support entries related to employment income and deductions when filing Self-assessment returns. Employees should retain records for at least 22 months after the end of the tax year.

For Company Directors

Company directors have similar income and tax reporting requirements related to their directorships. Recommended documents to retain include:

• P60 and P45 forms
• Payslips and payroll records
• Bonus and commission statements
• Receipts and mileage logs related to director business expenses
• Company benefits and expense records
• Company share scheme and share option award documents
• Employment contract
• Company credit card statements
• Bank account statements

In addition, directors may need to retain registers of interest, declarations of interest, and records of any conflicts of interest for company law compliance. Independent of director duties, all limited companies must maintain extensive accounting records, HMRC submissions, and other tax compliance documents.

Use Accounting Software

Using cloud-based accounting software can help employees and directors back up and manage many digital financial records seamlessly. Systems like Xero, QuickFile, and FreeAgent integrate with business bank accounts to sync transactions and simplify organising tax documents.

The Bottom Line: Proper documentation provides evidence and support for income amounts, taxes paid, expenses claimed and deductions taken by employees and directors. Keeping complaint records in an orderly manner ensures accurate personal and company tax reporting. Consult our tax accountants for advice tailoring robust record-keeping procedures for your situation.