Financial year-end: Everything you need to know
Ensuring a smooth and relatively stress-free close is the goal of every Finance lead when approaching year-end. Solid preparation is key. As is having the right team, access to the right tools and data, plus a robust plan of attack.
This guide will walk you through key steps, challenges, and tips for successfully navigating the financial year-end, helping your finance team streamline operations, reduce errors, and prepare for the new fiscal year with confidence.
What is the financial year-end and why does it matter?
The financial year-end marks the conclusion of a company’s accounting period, where all financial records are closed off for reporting and tax purposes. For some, the financial year coincides with the fiscal year. For others, there are two ‘year-ends’ to deal with if the accounting year-end is at another point such as the end of the calendar year.
Either way, closing off the year from a taxation and accounting basis (or both) requires plenty of effort.
The importance of financial year-end lies in ensuring accurate financial reporting, preparing for audits, and meeting legal obligations, such as tax filings. Efficient preparation can streamline closing accounts, improve budgeting, and set the stage for strategic business planning in the new year.
It’s always good to get new ideas on how best to approach important tasks such as closing accounts.
Key dates in the UK financial year
In the UK, the financial year typically runs from 6th April to 5th April of the following year. Important key dates include:
- 6th April: Start of the new financial year.
- 31st January: Deadline for submitting self-assessment tax returns for the previous financial year.
- 5th April: End of the financial year.
- 19th May: Deadline for submitting final PAYE returns for employers.
These dates are crucial for tax reporting, filing returns, and planning business finances effectively.
Why does the UK financial year start in April?
The UK financial year starts in April due to historical factors dating back to the 18th century. The calendar change from the Julian to the Gregorian system in 1752 shifted the new tax year from March 25th (the old New Year) to April 5th, and later to April 6th.
This was done to maintain the same number of days for tax collection after adjusting for the calendar reform. The April start has since remained, forming the foundation for tax assessments, business accounting, and government financial planning.
How do companies choose their fiscal year-end?
Companies choose their fiscal year-end based on several key factors, including:
- Industry cycles: Aligning the fiscal year-end with slower business periods or natural business downtime.
- Seasonality: Choosing a period when operations are less busy, simplifying the process of closing accounts.
- Tax considerations: Ensuring tax reporting is efficient and aligns with government deadlines.
- Parent company schedules: Aligning with the fiscal year-end of parent companies for easier consolidation.
- Regulatory requirements: Meeting legal or industry-specific financial reporting obligations.
It is vital that you know when your fiscal year ends so you can give yourself enough time to prepare.
Changing your financial year - Can you move it?
Yes, it is possible to change your financial year-end. Changing your financial year can be a strategic decision for a business, allowing for better alignment with operational cycles, industry standards, or tax considerations.
However, it involves careful planning and adherence to legal requirements. In the UK, businesses must notify HM Revenue and Customs (HMRC) of any changes to their financial year-end.
For detailed guidance, you can refer to the official HMRC resource on changing your accounting period: HMRC - Change your accounting period
How to prepare for year-end reporting: Your action plan for year-end
With so much to do to get through year-end, it makes sense to prepare your Finance team in advance and have a clear plan in place on how to tackle all the various tasks needed.
All Finance teams need to be cognisant of the pace of change. Businesses are increasingly looking to respond to ever changing market conditions and how they can compete and be successful in the markets that they play in. Our role in finance is to help support that. — The Access Group Chief Financial Officer, Rob Binns
Tips & Best Practices for End of Financial Year
In this quick 5-minute video, Phil Walters, previous Customer Success Manager at The Access Group, offers some useful tips when preparing for financial month-end and year-end.
- Plan Early: Establish a clear timeline and allocate responsibilities well in advance.
- Organise Data: Ensure that all financial records are up-to-date and accessible.
- Review Processes: Regularly assess internal processes for efficiency.
- Communicate: Maintain open lines of communication to address any concerns promptly.
- Stay Compliant: Be aware of any regulatory changes that may impact reporting.
Your 10-step year-end accounts checklist
For practical tips on how to avoid penalties and enjoy a seamless end to the financial year, we have put together a quick and easy-to-use 10-step checklist.
As we prepare and manage year-end close, we also need to find the balance of getting a budget in place for the new fiscal year. Budgeting with uncertainty is challenging, so finance leaders will need to assess current economic instability and ensure the budget is set up to be flexible to adjustments as the year progresses. — The Access Group Chief Financial Officer, Rob Binns
Looking forwards: Your month end checklist
You can make life at year-end so much easier by putting best practice in place every month. Download our month-end checklist and give your team a head start.
Finance leaders should be thinking about how we support the business growth we know we want to strive for in the upcoming year. How do I make what we do as efficient and as effective as possible? If you ask the average CEO, that’s what they want from their Finance team. — The Access Group Chief Financial Officer, Rob Binns
Common Financial Year-End Challenges
Navigating the financial year-end presents a range of challenges for businesses demanding careful attention and strategic planning. Here are some common challenges businesses we’ve worked with face. By addressing these challenges proactively, companies can navigate the financial year-end with greater ease.
Prepare for the year ahead with our go-to year-end accounts checklist.
Time Challenges
The financial year-end can be an incredibly busy period for companies, often leading to tight deadlines and increased workloads for finance teams. This rush can result in stress and oversight, complicating the closing process.
Data Accuracy
Ensuring data accuracy is crucial for producing reliable financial statements. Errors in data entry can have significant repercussions, potentially impacting decision-making and compliance.
Human Error
Human mistakes can occur in any part of the financial reporting process, from data entry to interpretation of financial information. These errors may lead to compliance issues and inaccurate reporting.
Tax Compliance
Managing tax obligations can be daunting during year-end. Companies must stay updated on changing regulations to ensure they meet their tax responsibilities, avoiding penalties and fines.
Regulatory Changes
Keeping up with regulatory changes can be challenging, requiring businesses to adapt their processes swiftly. This often involves additional training and adjustments to financial systems.
Managing Expenses
Accurate expense tracking is vital for financial clarity, yet it can be overlooked amid the hustle of year-end preparations. Implementing effective tracking methods can help maintain a clear view of financial health.
Solving your financial year-end challenges with Access
Navigating financial year-end challenges can be daunting, but with Access Group's finance management software, you can streamline the process and enhance accuracy.
Our solutions are designed to integrate seamlessly into your operations, helping you manage data effectively and comply with regulatory requirements.
By automating time-consuming tasks, you can focus on strategic decision-making and improving your overall financial performance.
Financial year-end FAQs
What’s the deadline for financial reporting?
In the UK, companies typically must submit their annual financial statements to Companies House within nine months after the end of their financial year. Specific deadlines can vary based on the type of company, so it's essential to check relevant regulations on the Companies House website.
For example, if a UK company’s financial year ends on December 31, 2024, it must submit its annual financial statements to Companies House by September 30, 2025.
What other business reporting duties do I have?
Beyond financial statements, businesses may need to file tax returns, and VAT returns, and ensure compliance with other regulatory requirements, such as annual confirmations and reports on directors' remuneration.
The Access Group can help you manage your financial reporting with our finance reporting software.
What are the Q1, Q2, Q3, Q4 of the financial year in the UK?
In the UK, the financial year is often broken down into quarters: Q1 runs from April to June, Q2 from July to September, Q3 from October to December, and Q4 from January to March.
When will the financial year 2025 end?
If a business follows the standard UK financial year, it will end on March 31, 2025. However, some businesses may have different year-end dates depending on their chosen accounting period.
