What Is a Fiscal Year? (A Simple Guide for UK Small Businesses)
If you run a small business in the UK, understanding your fiscal year (also known as your financial year) is crucial. It affects your taxes, reporting deadlines, and employee payroll. Let’s break it down.
1. What Is a Fiscal Year?
A fiscal year is a 12-month period your business uses for accounting and tax purposes. In the UK, a few different timeframes are available depending on how your business is set up:
- Sole traders & partnerships
Use the tax year from 6 April to 5 April of the following year. You report income via Self-Assessment. - Limited companies
Use their accounting year, which typically starts on the date of incorporation. This can be changed later by notifying Companies House. - PAYE (Pay As You Earn)
If you employ staff, the PAYE tax year always runs from 6 April to 5 April, just as the personal tax year does. This applies regardless of your business’s accounting year.
2. How Does the Calendar Year Fit In?
The calendar year runs from 1 January to 31 December. It’s the standard 12-month period we all use day-to-day, but it’s not always the same as your tax or accounting year.
Here’s a quick comparison:
| Term | Dates | Used For |
|---|---|---|
| Calendar Year | 1 Jan – 31 Dec | Everyday reference; some accounting years |
| Tax Year | 6 Apr – 5 Apr (next year) | Personal tax (sole traders, PAYE, etc.) |
| Accounting Year | Varies (often 12 months) | Company accounts and corporation tax |
Example:
Your company may have an accounting year from 1 January to 31 December, but you still report employee PAYE under the tax year from 6 April to 5 April.
If you are a Limited company and want to check the financial year, use the Companies House website.
3. Why Does It Matter?
Understanding your fiscal year helps you:
- File tax returns on time
- Manage cash flow and budgets
- Track business performance
- Stay compliant with HMRC
And if you have employees, it also helps you meet PAYE obligations, like reporting earnings and paying National Insurance.
4. PAYE and the Fiscal Year
If you run payroll through PAYE, here’s what you need to know:
- The PAYE year always ends on 5 April.
- You must:
- Report employees’ earnings to HMRC in real-time (RTI)
- Provide each employee with a P60 by 31 May
- Submit your final payroll report by 19 April
- Issue P11D forms (for benefits) by 6 July, if applicable
These tasks are tied to the PAYE year, not your company’s accounting year.
5. Why Does the UK Tax Fiscal Year Start on 6 April?
It all goes back to medieval England and the old Julian calendar.
Here’s the short version:
- Until 1752, the UK used the Julian calendar, where the new year began on 25 March (called Lady Day).
- In 1752, Britain switched to the Gregorian calendar (used across most of Europe). This new calendar was more accurate and aligned better with the solar year.
- To make the switch, 11 days were “skipped” — 2 September 1752 was immediately followed by 14 September 1752.
- To avoid losing tax revenue, the Treasury adjusted the tax year forward by 11 days, from March 25 to April 5.
- Later, in 1800 (a leap year), they added another day, making the start of the tax year 6 April.
6. Can You Change Your Fiscal Year?
- Sole traders follow the 6 April–5 April tax year – this cannot be changed.
- Limited companies can change their accounting year by filing a request with Companies House.
However, you can’t change the PAYE tax year—HMRC fixes it.
7. Quick Tips
✅ Align your accounting year with your trading cycle
✅ Plan for PAYE deadlines
✅ Use accounting software to keep everything synced
✅ Speak to a bookkeeper or accountant if you need help managing multiple timelines
Need Help?
Managing taxes and payroll can feel like juggling calendars. If you’re unsure, talk to a qualified bookkeeper or accountant—they can help keep your fiscal year and PAYE duties on track.
