End of Financial Year

End of Financial Year Tasks and dates

Every business has an end-of-financial year. This article will look at the different dates, the HMRC tax year, important deadline dates for self-employed people, and how to complete end-of-year accounting.

If you are a limited company, the dates that each business uses may vary; the date is set at Companies House. The annual financial reports will need to be prepared and submitted.

Fiscal Year

The Fiscal year or tax year in the UK is different from the calendar year. It starts on 6 April and ends on 5 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 has 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 worldwide. The old British calendar started on 25 March, but when the Gregorian calendar was introduced, it was 11 days behind the rest of Europe. 11 days were therefore added to 25 March, and the new tax year system was started.

UK Tax Year

As we have already stated, the UK tax year starts on April 6th and ends on April 5th of 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 on the 22nd of each month if paid electronically or on the 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 period runs from 6 April to 5 April. These are the dates for which the accounts are prepared.

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 to be submitted 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 31 January. You can submit them electronically using the Government Gateway, accounting software, or an accountant.

Payment dates – 31st January and 31st July

There are two payment dates: 31st January for any tax you owe (balancing payment) and the first payment on account, and 31st July for the second payment on account.

Payments on account are advanced payments towards your tax. You must make advanced payments if your tax bill is over £1000.

From April 2024, HMRC is introducing digital taxation for the self-employed. This 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, your financial period end will be different from the UK tax year. The dates of 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.

Example of Companies House Limited Company Dates

Some companies will have their financial year the same as the calendar year, ending 31st December.

Corporation Tax

Limited companies must pay corporation tax on any profits. Corporation tax is due nine months and one day after the end of the year.

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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 present and valued at the correct cost.
  • Prepayments – These can be complicated, but they are 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 you have not yet received a bill must be adjusted 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 the 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 producing the required reports, which 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.

The reports include:

Balance Sheet Report

A balance sheet is a snapshot of the company’s finances. It includes assets, liabilities and equity.

Profit and Loss or Income Statement

The profit and Loss statement shows all revenue, cost of goods sold, expenditures, and whether 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.

Statutory Accounts

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 they must meet certain standards. In the UK, this 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 the 6th of April and ends on the 5th of April of the following year. This is important for both employers and the self-employed.

Most financial end-of-year dates are different to the calendar year.

There are set dates for a tax return and statutory filing of accounts.