Martin Lewis has issued a strong warning about the importance of keeping financial documents in order, cautioning that failing to do so could lead to major issues with HMRC. Speaking on his BBC podcast, the consumer finance expert responded to a listener who was digitising their documents and wanted to know which contracts and financial products required original paper versions.
The Six-Year Rule and Tax Investigations
Lewis initially outlined a general timeframe, stating: 'The conventional wisdom is you only need to keep bank, credit card and other personal finance documents for six years, because HMRC - the tax office - is said to only be able to ask you to go back that far.' However, he noted that the rules can be more lenient for some people, but erring on the side of caution is advisable.
He explained: 'HMRC only requires tax records to be kept for most people doing self assessment for 22 months after the end of the tax year. Limited companies must generally keep accounting records for at least six years. But I would probably go for the six years anyway for safety just in case you have a tax investigation.'
Lewis emphasised the severity of a tax investigation, saying: 'There is nothing worse than a tax investigation. They have huge powers, it can be very distressing.' HMRC has extensive powers to order businesses and organisations to hand over financial information, and can require banks or employers to provide details when necessary.
Why Keeping Documents Longer Matters
Quoting a previous blog post, Lewis noted: 'Evidence of systemic mis-selling often takes years to work through the system. If it's related to a pension, it could be many decades, so it's impossible now to know what you may need the paperwork of in a few years' time. Therefore for safety, keeping all documents for as long as you can, even for now closed products, is a reasonable precaution.'
He pointed to the ongoing car finance scandal as a vindication of this principle. The scandal involves mis-sold car finance deals between April 6, 2007, and November 1, 2024. Average compensation per claim is estimated at £83, though payouts are unlikely before 2027. Lewis warned: 'You don't want to keep a record of every payment you've ever made, but for most major transactions, products or services, I would want to keep my sign up documents, any upgrade documents and any closure documents, which detail what was paid, what wasn't paid and what the terms were.'
Key Documents to Keep
Lewis shared a list of financial products for which key documents should be retained:
- Loans
- Credit cards
- Mortgages
- Car finance hire purchase
- Two bank statements for each year showing interest, fees and add-ons, including downloading key statements before switching or closing accounts, such as for package bank accounts or savings accounts
- Booking confirmations for flights or costly travel
- Other costly purchases, including any warranty or guarantees
He concluded: 'Anything that's enough to prove what you had, is where I would go with this.'
