How Long Do Charity Accounts Need to Be Kept 2025

How Long Do Charities Need to Keep Financial Records in the UK?

When you’re managing billions of pounds in public and private funds, as charities in the UK do, clear and compliant documentation becomes essential. There are strict reporting regulations in place. In fact, the Charity Commission leaves nothing to chance when setting the rules for charity record-keeping and reporting.

However, since you are relying on donations and grants to fund your charity, there’s a second aspect to take into account when keeping financial records: transparency.

Your donors expect your charity to strictly follow regulations and keep records that can account for how their funds have been spent.

But how far back should you go? And what penalties can you face if you fail to comply with the regulations? We’re ready to dive into the basics of charity financial record keeping.

What Are the Legal Rules for Keeping Records?

Charities in the UK are regulated by the Charity Commission and HM Revenue & Customs (HMRC), which establish the framework for financial record-keeping. The Charity Commission ensures compliance with charity law, whilst HMRC focuses on tax obligations.

Since charities have a different record-keeping and reporting system than UK companies, they often opt for specialised accountants who can make sure their accounts are kept in accordance with the regulations.

However, trustees should also understand the basics of financial record keeping.

How Long Do You Really Need to Keep Records?

The Charities Act 2011 requires charities to retain accounting records for at least six years from the end of the financial year in which they are made. If a charity ceases to exist within this period, its last trustees must ensure the accounts are preserved. However, records can be disposed of if the Charity Commission consents in writing.

Some records may need to be kept longer. Property-related documents, pension agreements, and certain grant-related paperwork can require indefinite retention.

What Type of Records Do You Need to Keep?

Your charity’s accounting records must explain all transactions. They should:

• Show daily income and expenditure.
• Record assets and liabilities.
• Disclose the financial position of the charity.
• Produce a statement of account compliant with regulations.

Examples include a cash book for tracking daily transactions, reconciled bank statements, and supporting evidence like receipts or invoices. A reliable cash book should be updated regularly and include separate records for multiple bank accounts. Modern tools like AccountsIQ can simplify this process, ensuring financial performance is easily monitored.

Grant and Major Donor-Specific Record Requirements

If your charity gets funding from grants or major donors, then you have to meet certain documentation and retention requirements that are often more than the six years required by the Charities Act 2011. Such provisions are usually provided in grant agreements or donor contracts and are important to demonstrate compliance and to ensure trust.

Key Documentation Requirements

Grant Agreements:

• Financial records: A good number of grantmakers, especially government agencies, demand that charities maintain good financial records for the grant for a certain period of time after the grant is finished. For example, record retention could be six years after the end of the grant term.
• Project reports: It is common to have strict requirements for comprehensive reports on project outcomes, expenditures, and adherence to grant objectives.

Donor Agreements:

Acknowledgement letters: It is crucial to preserve copies of acknowledgement letters or receipts given to the donors as they are part of the audit trail.

Use of funds: Donors may have certain limitations on how their funds can be used and thus it is important to document how you meet these requirements.

Why This Matters: Beyond Just Following Rules

Keeping financial records of your transactions is the healthy way of managing a charity. And the mandatory one. However, there are other advantages that come with having a good financial record-keeping system in place:

Avoiding Trouble With Regulators

Regulators like HMRC and the Charity Commission take compliance seriously. Poor record-keeping can result in fines, sanctions, and an increased likelihood of audits. Even minor mistakes can spiral into major issues if left unchecked. It’s essential to know what records you need to keep and for how long – ask for financial consultancy if you are unsure to make sure you can demonstrate your charity’s reliability to oversight bodies.

Building Trust With Donors and Supporters

Donors expect transparency. They want to know their money is being used responsibly, and clear records are the best way to show that. In 2024, 85% of trustees said they trusted the Charity Commission to uncover wrongdoing. That confidence stems from proper governance.

If you comply with the Commission’s regulations and maintain a high level of transparency, you have a higher chance of retaining current donors and attracting new ones.

Since the competition for funds becomes more acute year by year, charities can no longer afford to send out a “questionable” vibe. Make sure all your records are in order and keep them for as long as the Commission and the HMRC require it.

Making Life Easier for Your Charity

Good records make everything easier. From audits to grant applications, having organised documentation saves time and prevents stress. Clear financial records also provide a solid foundation for strategic decisions and help manage risks effectively.

If your charity ever faces an emergency, such as a sudden funding shortfall, proper documentation ensures you can respond quickly and confidently.

Tips to Stay on Top of Your Records

Now that we’ve discussed for how long UK charities need to keep financial records, what records to keep, and the advantages of having a good record-keeping system in place, we’ve got some advice on how you can simplify your work.

Simple Ways to Organise Your Records

Keeping your records organised doesn’t have to be complicated. If you prefer digital systems, use cloud-based platforms that allow for easy searching and secure backups.

For physical records, create clearly labelled folders with categories like “Donations,” “Invoices,” and “Contracts.”

Make updating your records a regular habit. Weekly or monthly check-ins work best to avoid falling behind. Also, ensure that sensitive documents are stored securely – password-protected drives or locked filing cabinets are simple yet effective solutions.

Tools That Make Record-Keeping Easier

Almost all charities use software to organise their financial records today, which can take the stress out of financial management.

Intended for small to medium enterprises, platforms like QuickBooks, Xero, or Sage are designed to manage accounting functions from tracking expenses to producing financial reports. Many of these tools also provide an extra layer of security through automated backups.

Are you using a digital system? It is necessary to back up your records regularly. This is usually automated in cloud platforms, but it does not hurt to check. Don’t forget cybersecurity: encryption, firewalls, and strong passwords are essential to protect sensitive data.

Get a Retention Policy in Place

It’s easy to overlook important regulations if you don’t have a system. Start by listing all the documents your organisation deals with and how long they need to be kept. The six-year rule applies to most records, but exceptions like property or grant-related files should be noted.

Assign someone the responsibility for overseeing your records. This ensures consistency and accountability. Review the policy annually to keep it up to date with any regulatory changes or shifts in your organisation’s needs.