Calendar, Tax, Financial and Company years - what is the difference?
Posted 13 Jun 16
Running a successful business involves staying on top of your bureaucratic and administrative responsibilities. However, keeping track of all the paperwork and deadlines related to submitting it to HMRC and Companies House can be an exhaustive and confusing tax.
HMRC and Companies House don’t make it easier for companies directors and freelancers by having a tendency to naming different deadlines in ways which make them sound similar. In this article we will focus on four most important “years” of every company: Calendar, Tax, Financial and Company year.
The calendar year is exactly what you think it is and it runs from January 1st until December 31st.
Tax Year/ Financial Year
The tax year, also known as the financial year is a twelve month period set by the Government. In the UK the tax year for personal tax runs between April 6th and April 5th the following year.
Here matters become a little confusing. Company year is often referred to as ‘Your financial year’ or ‘Your Accounting Period’. It begins when your limited company is first formed and lasts a year. Various returns and submissions you are responsible to file to HMRC and Companies House are dictated by your Company Year.
Knowing the dates of your returns and submissions are absolutely crucial in running a successful business and avoiding any late payment fines from HMRC. Make sure you find out exactly when your annual returns and annual accounts, as well as, your self-assessment should be filed for.
Unlike the previous years, the length of your company year can vary from company to company. If you or your accountant believes it necessary, you can make your first company year run shorter or longer than twelve months in order to change and adjust dates for when certain returns and submissions are due.
Corporation Tax Year
Corporation Tax Year for your company will generally run for twelve months after the incorporation, and can only be for a maximum of twelve months. This means that if you decide to set a longer first company year, you might need have two Corporation Tax years in result.
In case of any changes being introduced in Corporation Tax rules or rates, the year for changes runs between April 1st and March 31st the following year.
The simplest way to avoid unnecessary stress is to hire a professional and experienced accountant, who will take the burden of paperwork off you. Tawanda Accountants is a team of expert accountants whose best interest is to let our clients focus entirely on the development of their business while we take care of their bookkeeping and accounting for them. We ensure that all your accounting is up-to-date, accurate and ready for investigation at any time. Hiring us will allow you to plan your business future in a successful way without worrying about any missed deadlines or late payment penalties. If you want to find out more about how we can help you better your business, contact us today.