Every business will have an end of financial year. This article will look at the different dates, the HMRC tax year, important deadline dates for self-employed, and how to complete the end of year accounting.
The dates that each business uses may vary if you are a Limited company; the date is set at Companies House. The annual financial reports will need preparing and submitting.
The Fiscal year or tax year in the UK is different from the calendar year, and the year starts on 6th April and finishes 5th April, a period of 12 months. It runs over two different years; it is written, for example, as 2020/21.
One of the things that have always puzzled me is why use 5th April as the end date?
It is set according to the Gregorian calendar, which has remained a standard for a long time. This calendar has been in use since 1752 and is recognised across the world. The old British calendar started on 25th March, but when the Gregorian calendar was introduced, it was 11 days behind the rest of Europe. 11 days were therefore added to 25th March, and the new tax year system was started.
UK Tax Year
As we have already stated, the UK tax year starts on 6th April and ends on the 5th April the following calendar year, but what does that mean for businesses?
There are certain documents and payments that an employer must file for each tax year; these include:
- 31st May provide a P60
- 6th July filing deadline for the expenses and benefits forms, including P11D(b), P9D and P11D
- 22nd July Class 1A NIC and PAYE due (electronic payment)
- PAYE is due 22nd of each month if paid electronically or 19th by cheque.
Any late payment or form submission may result in interest and a late payment fee.
If your business uses a payroll service, this should all be included in the price.
Self-Assessment Tax Return Dates
There are a few important dates for the self-employed or if you need to complete a self-assessment tax return.
Year-end Date – 5th April
The UK tax runs from 6th April to 5th April. These are the dates that the accounts are prepared for.
Registration – 5th October
This is the last date on which you can register for self-assessment.
Paper Tax Returns – 31st October
If you are still using paper tax forms, the last date to arrive with HMRC is 31st October. One thing to consider is that the government is introducing making tax digital. Under this scheme, all returns will need submitting online. The first tax year that the plans might affect is 2023/24.
Online Tax Returns – 31st January
All electronic self-assessment returns are due by 31st January. There are several options to submit electronically using the Government Gateway, accounting software or via an accountant.
Payment dates – 31st January and 31st July
There are two payment dates; the first is 31st January for any tax you owe (balancing payment) and the first payment on account. 31st July is for the second payment on account.
Payments on account are advanced payments towards your tax. You are required to make advanced payments if your tax bill is over £1000.
From April 2024 HMRC is introducing making tax digital for self-employed. It will mean that self-assessment tax returns will be submitted using third-party software. We have reviewed the best accounting software for the self-employed.
Limited Company Year-End
If you are a Limited company, you will have a different financial period end to the UK tax year. The dates or any Limited company can be found on Companies house, along with all the filed reports.
Below is an example of a Limited registered business. It shows the business was registered on 31st March 2018, and their year-end is1st April to 31st March. Statutory accounts are due 9 months after the year-end.
Some companies will have their financial year the same as the calendar year, and it ends 31st December.
Limited companies need to pay corporation tax on any profits. Corporation tax is due 9 months and 1 day after the end of the year.
End of Financial Year – tasks
One of the busiest times for any small business is at the financial year-end and ensuring that the accounts are complete. If you complete the accounts regularly, this will make it easier.
Below is a checklist including some of the tasks:
- Ensure that the bank in the accounts balances with the bank statements. This is called bank reconciliation. it ensures that all the transactions are posted.
- Depreciation – If you own assets, post a journal in the accounts for depreciation. It allows the assets to be reduced over time.
- Stock Take – If you keep stock, completing a stock take will ensure that the stock is there and valued at the correct cost.
- Prepayments – These can be complicated, but it is about ensuring all income and costs are in the correct financial year. An example of a prepayment is that insurance is paid in advance for the whole year, but only 6 months relate to the financial year. A journal is therefore created between insurance and prepayments.
- Accruals – Any amounts from suppliers that you have not yet received a bill for will need adjusting with an accrual.
- Check Debtors and Creditors are correct. it is a good time to check that there are no bad debts and also check supplier statements to ensure all transactions are included. Ensure that all customers are invoices so that the revenue is correct.
- Remove all personal payments from the accounts. It is better to have a separate bank account.
- Print out a trial balance, it shows all the account codes from both the balance sheet and profit and loss account. This is an excellent report to see all the figures in one place.
End of Financial Year – Important Dates
One of the most important things is to produce the required reports; these are known as management reports. The easiest way to obtain the reports is by using accounting software. We recommend Xero, FreshBooks or QuickBooks. There are also free software packages, including Pandle and Bokio.
The reports include:
Balance Sheet Report
A balance sheet is a snapshot of the companies finances. It includes assets, liabilities and equity.
Profit and Loss or Income Statement
The profit and Loss show all the revenue, cost of goods sold, expenditure and if the company has made a profit or loss.
Cash Flow Forecast
Not all businesses will produce this report, but it looks at the cash in and out for the following year. This report enables planning for the future and perhaps new investments.
These are required by Limited companies and filed 9 months after the end of the financial year.
Statutory accounts are normally prepared by accountants as there are certain standards that they must meet. In the UK, it is the Generally Accepted Accounting Practice.
The accounts must include a balance sheet, profit and Loss and notes about the accounts. Depending on the size of the company, it may also include directors and auditors reports.
Conclusion for End of Financial Year
The UK tax year or fiscal year starts on 6th April and ends on 5th April the following year. This is important for both employers and the self-employed.
Most financial end of year dates is different to the calendar year.
There are set dates for a tax return and statutory filing of accounts.