Martin Lewis has issued a stark warning about the importance of maintaining financial records, cautioning that failing to keep necessary paperwork could result in serious trouble with HMRC. The consumer expert shared his advice on his BBC podcast after a listener asked about digitising documents and which contracts and financial products require original paper copies.
General Timeframe for Keeping Documents
Lewis explained the conventional wisdom: "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." He noted that while HMRC only requires tax records for most self-assessment individuals to be kept 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," he added.
HMRC's Sweeping Powers
Lewis emphasised the seriousness of a tax investigation, stating: "There is nothing worse than a tax investigation. They have huge powers, it can be very distressing." HMRC can compel businesses and other organisations to hand over information regarding financial affairs, including records and transactions. In individual cases, they can force banks to release information or contact an employer to obtain required details.
Long-Term Retention for Mis-Selling Claims
Referring to a previous blog post, Lewis warned that evidence of systemic mis-selling often takes years to surface. "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," he said. He advised keeping all documents for as long as possible, even for closed products, as a reasonable precaution. This principle was recently validated by the ongoing car finance scandal and forthcoming compensation scheme, which involves mis-sold deals between April 6, 2007, and November 1, 2024. The average typical compensation payout per claim is thought to be £83, though payments are unlikely before at least 2027.
Key Documents to Retain
Lewis provided a list of financial products for which essential documents should be kept: 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), booking confirmations for flights or costly travel, and 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."
