What is the financial year and why is it important?

Why is the new financial year important?

The financial year refers to the 12-month period that companies, governments, organisations, and individuals use for tax and accounting reporting purposes. It’s also sometimes referred to as a fiscal year or tax year. Tax, turnover, profits, and losses are all calculated every year.

Individuals are also impacted by the financial year. Most employees pay income tax via their employers with the PAYE (Pay As You Earn) system, which is based on the government’s tax year.

The financial year is helpful for both companies and individuals to budget and assess their finances.

Key dates in the UK financial year

In the UK, the financial year begins on the 6th of April of the current year and ends on the 5th of April of the following year.

When referring to a financial year, both calendar years are mentioned. For example, the tax year that began on 6th April 2022 and ended on 5th April 2023 would be referred to as the 2022/2023 or 2022-23 financial year.

The financial year for UK companies

The standard financial year, or tax year, of 6th April to 5th April applies to the government and individuals.

This can often be different for companies. While companies’ financial years also span 12 months, the dates usually line up with when the company was incorporated, although companies can also choose their own financial year dates. The exception is the first year of the company’s existence.

While the government financial year goes from 6th April to 5th April of the following year, companies’ financial year start dates are varied. Companies must still pay attention to the government’s fiscal year, especially tax deadlines.

UK financial year key dates

In the UK, there are a few important dates in the financial year to remember for tax purposes:

4th April - PAYE registration deadline.

6th April - The start of the new financial year for the government and individuals. New tax rates and rules go into effect on this date.

31st May - Companies must provide employees with their P60, a document that summarises total pay and deductions for the year.

6th July - Deadline for employers to report employee benefits and expenses. Submit the P11D to HMRC.

5th October - The deadline to register for self-assessment tax returns. Refer to the HMRC to see if you fall under one of the self-assessment categories. To complete a return for the 2023/2024 tax year, you must register by 5 October 2024.

31st December - The deadline to report any capital gains.

31st January - The deadline to submit self-assessment tax returns and the payment deadline for Capital Gains Tax.

5th April - End of the financial year.

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