As the fiscal year in the UK draws to a close, the pressure mounts. All the deadlines and confusion can turn what should be straightforward into a complex maze of compliance and paperwork.
It's a common challenge - the race to ensure everything is meticulously recorded, reported, and submitted on time, all to sidestep those feared penalties.
That's exactly why we've put together this guide: to cut through the complexity and provide you with a clear roadmap of the key dates and obligations.
Let's tackle the end of the fiscal year together, transforming it from a source of stress into an opportunity for a clean slate and fresh planning for the year ahead.
Please note: The content provided in this blog is for informational purposes only. For more detailed advice consider consulting a tax professional.
What is the Fiscal Year in the UK?
In the UK, the fiscal year is the time the government, businesses, and individuals use for accounting and budget purposes. This includes planning finances and figuring out taxes that need to be paid.
It's an important period for keeping track of earnings and expenses, including the calculation of taxes owed to the government.
Fiscal Year vs Financial Year: What’s the Difference?
The fiscal year and financial year in the UK are terms that often get used interchangeably, but they play crucial roles in how businesses and individuals manage their finances.
Let's break down what each term means:
Fiscal (Tax) Year:
This is the time frame the UK government uses for tax purposes.
For individuals, it runs from April 6th to April 5th of the following year.
It's when you need to report your income and calculate taxes owed.
Financial Year:
Refers to the period used by businesses to report their financial results.
The dates can vary from business to business; however, many align their financial year with the government's fiscal year.
To sum up:
The fiscal year is when you deal with taxes on income you've earned.
The financial year is about when businesses report earnings and expenses.
What are Financial Quarters in the UK?
Businesses can set their own financial quarters, but many choose to align them with the calendar quarters for simplicity.
These quarters are crucial for managing finances, preparing for taxes, and reviewing business performance.
Here's a quick breakdown:
Q1 (First Quarter): April 1 - June 30
Q2 (Second Quarter): July 1 - September 30
Q3 (Third Quarter): October 1 - December 31
Q4 (Fourth Quarter): January 1 - March 31
Why Do Financial Quarters Matter?
For businesses: Quarters are key for checking on progress, adjusting strategies, and getting ready for tax payments.
For individuals: They're a reminder to look at investments, savings, and plan for taxes.
Key Dates of the Fiscal Year in the UK: A Complete Guide
Navigating the fiscal year in the UK involves keeping track of several critical dates, whether you're an individual taxpayer, a self-employed professional, or running a business.
Missing these dates can lead to penalties, so make sure to mark them in your calendar.
Below, we provide a detailed guide to the key dates in the UK fiscal year, ensuring you stay on top of your financial and tax obligations.
Start of the Fiscal Year
6 April: The new fiscal year begins. This date marks the start of new tax rates and rules for the government and individuals.
Important Financial Deadlines Throughout the Year
4 April: Deadline for PAYE registration to ensure you're set up to deduct income tax and National Insurance contributions from employee wages.
31 May: Deadline for employers to provide employees with their P60, summarising their total pay and deductions for the year.
6 July: Deadline for reporting employee benefits and expenses on the P11D form to HMRC.
5 October: Deadline to register for Self Assessment tax returns. If you need to file a return for the 2023/2024 tax year, you must register by this date.
31 October: Deadline for submitting paper tax returns.
31 December: Deadline to report any capital gains tax liabilities for the past fiscal year.
31 January: The due date for submitting Self Assessment tax returns online for the previous tax year and for paying any owed Capital Gains Tax.
End of the Fiscal Year
5 April: The fiscal year comes to an end, paving the way for the next tax year and the cycle begins once again.
How to Prepare for the End of the Fiscal Year: Step-by-Step
Preparing for the end of the fiscal year can seem daunting, but breaking it down into manageable steps can make the process much smoother and make sure you're ready for the year ahead.
Here’s a step-by-step guide to help you prepare effectively:
1. Review Your Accounts
Go through your accounts to ensure all financial transactions over the past year are recorded accurately. This includes income, expenses, investments, and any other business transactions.
Here’s how:
Gather your financial records: Collect all your financial documentation, including bank statements, invoices, receipts, and any digital transaction records.
Check income records: Verify every source of income. This could be sales revenue, returns on investments, or any additional income streams.
Examine expenses: Go through your expenses to make sure they are all accounted for. This includes operational costs, purchases, utility bills, and any other expenses incurred.
Cross-verify with bank statements: Take a bank statement and match it against your recorded transactions for a selected month.
Identify discrepancies: If you notice any discrepancies between your records and bank statements, investigate further.
Adjust entries if necessary: Should you find inaccuracies, make the necessary adjustments. This might involve adding missing transactions or correcting incorrect entries.
2. Organise Your Documentation
Gather all necessary financial documents, such as invoices, receipts, bank statements, and payroll records. Having these documents organised will be crucial for filing your taxes and may be needed for reference.
Here’s how:
Create a checklist: List all documents you need, such as invoices, receipts, bank statements, and payroll records.
Choose a filing system: Opt for digital or physical storage. For digital, create folders for each document type (e.g., "Invoices_2023"). For physical documents, use labelled folders.
Digitise paper documents: Scan physical invoices and receipts, naming them consistently (e.g., “Invoice_ClientName_Date”).
Sort receipts: Categorise receipts by expense type (office supplies, travel) for easier access and tax filing.
Organise bank statements: Collect and review monthly statements, noting significant transactions.
Consolidate payroll records: Keep all payroll details together, including payslips and tax withholdings.
3. Reconcile Bank Statements
Match your bank statements against your recorded transactions to ensure they align. This process helps identify any discrepancies or unrecorded transactions.
Here’s how:
Collect monthly statements: Start by gathering all your bank statements for the year. If you use online banking, you can download these directly from your bank’s website.
Prepare your transaction records: Have your ledger, accounting software, or spreadsheet of recorded transactions ready for comparison. This should include all transactions: income, expenses, transfers, and fees.
Begin matching transactions: For each transaction on your bank statement, find the corresponding entry in your record and check off each match to confirm they align.
Identify discrepancies: If you find transactions on your bank statement not recorded in your books or vice versa, note these discrepancies.
Investigate and resolve differences: Investigate why the discrepancies exist (e.g., overlooked transactions, bank errors) and correct them. Add the overlooked bank fee to your expense records, noting the date and category.
Update your records: After resolving discrepancies, update your financial records to reflect the accurate state of your transactions.
Regular practice: Make reconciling a regular monthly practice. This not only keeps your records accurate but also simplifies year-end reconciliation.
4. Check Tax Obligations
Review the taxes your business is liable for and any changes in tax regulations that may affect your returns. This includes income tax, corporation tax, VAT, and any other relevant taxes.
Here’s how:
List your tax types: Start by listing all the taxes your business is subject to. Common types include Income Tax, Corporation Tax, VAT, and PAYE.
Stay informed on tax changes: Tax laws and rates can change, so it's crucial to stay informed. Check the official HMRC website or subscribe to their updates.
Review tax deadlines: Note down all relevant tax deadlines, such as for submitting tax returns and making payments. Missing these can result in penalties.
Estimate your tax liability: Based on your profits and the current tax rates, estimate how much tax you'll owe. This helps in budgeting and avoids surprises.
Document everything: Keep detailed records of all transactions, as they can be deductible or influence your tax obligations. Accurate documentation supports your tax filings and can protect you in case of an audit.
5. Maximise Tax Deductions
Lowering your tax bill starts with recognising and documenting deductible expenses. Here’s how:
Identify deductible expenses: Learn what expenses can be deducted, like office costs, travel, and marketing.
Collect receipts: Keep all receipts and records for these expenses. A digital folder for each expense type simplifies this.
Update records promptly: Regularly add expenses to your records, categorising them for easy access during tax time.
Use accounting software: Use accounting software to categorise and track expenses. Many platforms highlight potential deductions, simplifying the process.
6. Settle Outstanding Invoices
Quickly resolving unpaid invoices and debts ensures your financial records are up-to-date. Here's how:
Audit invoices: Start by listing all issued invoices for the year, noting which are paid and unpaid.
Contact debtors: Send reminder emails or call clients with overdue payments.
Arrange payments: Offer flexible payment options if needed.
Pay your bills: List all outstanding bills your business owes and prioritise them based on due date and importance.
Record transactions: Document all communications with clients about outstanding invoices and all receipts for bill payments.
Reconcile after payments: Once payments are made and received, update your financial records to reflect the current status.
7. Update Payroll Records
Make sure all payroll information is up to date, including payments made to employees, tax withheld, and contributions to pension schemes.
Here’s how:
Review employee details: Ensure employee information (e.g., addresses, salary changes) is current.
Verify payments: Check that all salary payments match your records.
Confirm tax withholdings: Review taxes withheld from each payment for accuracy.
Check contributions: Ensure correct pension scheme contributions.
Use payroll software: If available, payroll software can automate many of these checks.
8. Prepare a Financial Report
Compile a financial report for the year, summarising income, expenses, profit, and loss. This will give you a clear picture of your financial health and is essential for tax filing.
Here’s how:
Gather data: Collect all financial data, including income, expenses, assets, and liabilities.
Classify information: Organise data into categories like sales revenue, operational costs, and payroll expenses.
Calculate profit and loss: Subtract total expenses from total income to determine your net profit or loss.
Use templates or software: Consider using financial report templates or accounting software to simplify this process.
Review for accuracy: Double-check the figures to ensure they're correct and reflect your fiscal year.
Highlight key points: Summarise important findings, such as revenue growth or areas where expenses have increased.
9. Plan for Tax Payments
Estimate your tax liability and plan how you will make payments. It’s important to have funds set aside for this purpose to avoid penalties for late payment.
Calculate tax liability: Use your financial report to estimate the taxes you owe. If unsure, use online calculators or software.
Set aside funds: Create a separate savings account for tax payments to ensure you have the necessary funds when they're due.
Schedule payments: If possible, set up automatic payments to HMRC to avoid missing deadlines.
10. Seek Professional Advice
Consider consulting with a financial advisor or accountant to review your financial report and tax return. They can offer advice on minimising tax liabilities and ensuring compliance with tax laws.
Here’s how:
Choose an expert: Look for a financial advisor or accountant with experience in your industry.
Prepare documents: Before your meeting, gather all relevant financial reports, tax returns, and questions.
Implement advice: Apply their recommendations to improve tax efficiency and compliance.
11. File Your Tax Return
Submit your tax return by the deadline. Make sure it’s accurate and complete to avoid any issues with the tax authority.
Check deadlines: Note the final submission date for your tax return to avoid penalties.
Review details: Double-check your tax return for accuracy. Ensure all income, deductions, and credits are correctly reported.
Submit early: If possible, file your tax return well before the deadline to mitigate last-minute issues.
12. Reflect and Plan for the Next Year
Reflect on the past fiscal year to identify areas for improvement. Use this insight to plan your financial strategy for the upcoming year, setting goals for growth and efficiency.
Analyse performance: Review what worked well and what didn’t, financially, over the past year.
Set goals: Based on your reflection, set realistic financial goals for growth, savings, and efficiency.
Create a budget: Develop a budget that aligns with your goals, adjusting for anticipated changes in income and expenses.
Navigating Tax Returns and Deadlines in the UK
PAYE Registration Deadline (4 April)
If you're employing staff for the first time, register for PAYE with HMRC to deduct income tax and National Insurance contributions correctly.
Visit the HMRC website and follow the PAYE registration process at least a month in advance. This gives you ample time to address any queries that may arise during registration.
Start of the Fiscal Year (6 April)
Be ready for updates in tax legislation, which could affect personal and business finances, including tax rates and allowances.
Review HMRC's announcements on tax changes for the new fiscal year. Adjust payroll settings and personal savings plans accordingly to maximise tax efficiency.
P60 Distribution Deadline (31 May)
Issue P60s to all employees on your payroll at the year's end, detailing their annual earnings and deductions.
Utilise payroll software to generate P60s efficiently. Ensure accuracy by double-checking each employee's details and totals before distribution.
Deadline for Reporting Employee Benefits (P11D) (6 July)
File a P11D form for each employee receiving benefits or expenses that aren’t put through payroll.
Start gathering information on employee benefits early. Use HMRC’s P11D guide to accurately report each item. Submit online to streamline the process.
Self Assessment Registration Deadline (5 October)
Register with HMRC for Self Assessment if you’re newly self-employed or have additional income to report.
Complete your registration online via the HMRC website. Doing so immediately upon starting your business or realising additional income ensures you're prepared for tax filing.
Paper Tax Returns Deadline (31 October)
Submit your paper Self Assessment tax return to HMRC.
Organise your financial records early in the year. Consult with an accountant if you’re unsure about your tax obligations or deductions to ensure your return is accurate and maximises potential savings.
Capital Gains Tax Reporting Deadline (31 December)
Report and pay Capital Gains Tax if you’ve sold property, shares, or other chargeable assets for a gain.
Keep detailed records of purchases and sales, including dates and amounts. Calculate your gains early and report them using HMRC’s real-time Capital Gains Tax service or through your Self Assessment tax return if applicable.
Self-Assessment Tax Return Deadline for Online Submissions (31 January)
File your Self Assessment tax return online and settle any tax due for the previous year.
Use HMRC’s Self Assessment online service to submit your return. Consider employing accounting software or a tax professional to ensure your information is complete and leverages all allowable deductions and reliefs.
Deadline to Pay Any Tax You Owe (31 January)
Pay your Self Assessment bill, including any owed tax and first payment on account for the next year, if applicable.
Set aside money for your tax bill throughout the year. If you’re unable to pay in full, contact HMRC as soon as possible to discuss setting up a payment plan.
End of the Fiscal Year (5 April)
Close your books and start preparing for the tax obligations of the next fiscal year.
Perform a year-end review of your finances. Identify areas for improvement and plan accordingly for the next fiscal year. Consider meeting with a financial advisor to discuss strategies for growth and tax savings.
Avoiding Penalties: What Happens if You Miss a Deadline?
What are the penalties for filing a Self Assessment tax return late?
If you miss the Self Assessment deadline, you'll face an immediate £100 penalty.
Additional charges and interest accrue if the delay extends beyond 3 months, including daily penalties of £10 up to 90 days, and further penalties at 6 and 12 months.
Can I appeal against a penalty if I have a reasonable excuse?
Yes, HMRC considers appeals against penalties if you have a 'reasonable excuse' for missing a deadline. According to HMRC, these reasonable excuses include:
If your partner or a family member passed away right before the tax deadline.
Being unexpectedly admitted to the hospital.
Experiencing a severe or life-threatening illness.
Your computer or tax software crashed when you were about to or while preparing your online tax return.
Having trouble with HMRC's online services.
A disaster like a fire, flood, or theft made it impossible to get your tax return done.
Unexpected postal issues.
If you have a disability or mental health condition that caused delays.
Not knowing or misunderstanding your responsibility to file a return.
Depending on someone else to file your return for you, but they didn't do it.
You'll need to explain your situation and provide evidence where possible.
How can I prevent penalties if I realise I'll miss a deadline?
If you anticipate missing a deadline, contact HMRC as soon as possible. They may offer advice or arrange a payment plan to help manage your tax liability and minimise penalties.
Payment Methods for Tax in the UK
Paying taxes in the UK can be done through several convenient methods. Understanding your options can help you choose the best method for your situation.
Here’s an overview:
Direct Debit: Set up a Direct Debit through your HMRC online account for automatic payments.
Bank Transfer (Faster Payments): Make a payment directly from your bank, usually on the same or next day.
Debit or Credit Card Online: Use your card to pay online via the HMRC website. Note that credit card payments may incur a fee.
BACS: Payments through the Bankers' Automated Clearing Services take up to three working days.
CHAPS (Clearing House Automated Payment System): Ideal for large payments, ensuring same-day transfer if made within the bank’s processing times.
Cheque by Post: Send a cheque to HMRC. Remember to allow time for the cheque to arrive and be processed before the deadline.
At Your Bank or Building Society: You can pay at your bank or building society by cheque or cash using a paying-in slip from HMRC.
Note: The option is no longer available to make payments to HMRC at Post Office branches.
Each method has its own processing times and potential fees, so it's important to plan ahead to ensure your payment reaches HMRC before the deadline.
Planning Ahead: Tips for the Next Fiscal Year
Starting a new fiscal year on the right foot involves forward-thinking and strategic planning. Here are some tips to help you prepare and potentially improve your financial standing:
Review past performance: Analyse your financial reports from the previous year to identify strengths, weaknesses, and areas for improvement.
Set financial goals: Based on your review, set clear, achievable goals for revenue, expenses, savings, and investments for the upcoming year.
Budget for taxes: Estimate your tax liabilities and set aside funds monthly. Consider opening a separate bank account for tax savings to avoid spending the money unintentionally.
Optimise tax planning: Consult with a tax advisor early in the year to explore tax-saving strategies and ensure compliance with new tax regulations.
Update accounting practices: Implement any necessary changes to your accounting software or processes to improve efficiency and accuracy.
Monitor cash flow: Develop a cash flow forecast to manage income and expenses effectively, ensuring you have sufficient liquidity for operations and growth.
Plan for major expenses: Identify anticipated large expenses, such as equipment purchases or expansion efforts, and start saving or securing financing well in advance.
Invest in growth: Allocate resources towards marketing, product development, or market expansion efforts to drive business growth.
Review and update financial policies: Evaluate your policies on invoicing, credit control, and expenses. Make adjustments to streamline operations and improve financial health.
Educate your team: Ensure your staff understands the financial goals and how they can contribute to achieving them, fostering a culture of financial responsibility and teamwork.
Conclusion: Maximising Your UK Fiscal Year Planning
As we wrap up this fiscal year in the UK, let's not forget how important it is to keep track of expenses. That's where ExpenseIn comes in. It's a comprehensive tool designed to make handling your expenses much easier, helping you stay on top of your finances without the headache.
Want to see how it can make your life easier? Book a demo and see firsthand how it can simplify managing your expenses, making your fiscal year preparations smooth and straightforward.
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