Tax Years and the 9-month Golden Rule
Financial years vary from country to country as per their existing taxation laws.
In the UK, the tax years are different for individuals and companies.
Start Date: 6th April of the current year End Date: 5th April of the following year
Start Date: Anniversary of the Company Incorporation Date in the current year
End Date: Normally 12 months long, except in the first year when the period runs from the date of company formation until the end of the same month the following year.
Why it is important to be aware of your tax year?
Individuals – Individuals who are registered for self-assessment for any purpose (either self-employed or directors of Limited Companies) must file their tax returns within 9 months of the financial year end. In the UK, the date everyone remembers is 31st January: You must submit your tax return before 31st January of the following year.
Example for Financial Year 2017-18 for an individual:
Mr X is a self-employed person. Being self-employed, it is important that Mr X is registered for self-assessment and submits a tax return to HMRC. Mr X’s current financial year runs from 06th April 2017 to 05th April 2018. He must declare all earnings from all sources in his 2017-18 tax return and submit it to HMRC before 31st January 2019.
Example for Financial Year 2017-18 for a limited company: Limited company X has a financial year from 1st July 2017 to 30th June 2018. Assuming this is not their first trading period, their submission deadline will be 31st March 2019. The best practice will be to submit to HMRC at the same time, along with the tax return.
Don’t companies have an additional 3 months to submit their tax returns to HMRC?
Yes, they do but why put your organization at risk? Responsible and professional accountants will prefer to submit the company tax return and the company accounts to HMRC at the same time they are submitting to Companies House.
I can easily bore you with a technical debate of 9 vs. 12 months and the different deadlines for Companies House and HMRC, but there’s really no need. For simplicity and ease of understanding, please remember the golden rule of 9 months to submit your accounts to both Companies House and HMRC.
In sum…the 9-month rule applies to both individuals and limited companies.
At Fortuous Chartered Certified Accountants, we believe in helping ensure the simple and basic understanding of taxation and accounting rules. Hence, our articles. Our aim is not to indulge in technical debates or confuse businesses further with complex taxation and accounting laws.
We believe that as a successful business owner, you should be aware of this information about submissions and deadlines. True, your accountants are responsible for keeping you and your business in full compliance with accountancy & taxation laws. Yes, it’s the accountant’s job to ensure your accounts and tax returns are filed with the relevant authorities in time. However, we give you important information, so you can follow up and be on the safe side.