The end of the year marks a crucial period in the accounting calendar. The period generally sees a business close twelve months of trading, books, and convert a year of transactions into a formal set of financial statements. Post this period, a business is required to fulfill certain compliance requirements primarily from Company House.
One way to think about it is an end of year stock take; however, in this case the shelves hold numbers rather than goods. A business owner must stroll through the aisles at month’s end, verify the inventory physically present, and compare it with the recorded data to ensure consistency. If the numbers disagree, it needs to be worked out why.
Get it wrong and the consequences are quick to take effect. As per data from Companies House, over 297,682 late filing penalties were levied in 2024/25 with a combined value of £157.2m. Out of the total, 75,062 were doubled penalties against companies that had filed late in consecutive years. More unnerving is the fact that these penalties are automatic. They are issued the day after the deadline passes, without warning, and they are not deductible against profits.
This guide explains the details of the year-end closing accounting procedure, including important deadlines, the behind-the-scenes activities performed by accountants, and the anticipated updates coming in April 2028.
What is year end in accounting?
A company’s year end, or accounting reference date, marks the close of its accounting period. For a newly incorporated company, Companies House sets it as the last day of the month in which the company was registered. A company formed on 14 March will carry a 31 March year end unless it changes it.
That single date determines three things:
- The timeframe addressed by the official financial statements
- The Companies House filing deadline
- The corporation tax accounting period, and with it the CT600 and payment dates
There were 5.43 million companies on the UK register on 31 March 2025, according to the Companies House annual report, up from 5.35 million a year earlier. Every one of them carries a reference date, and the majority cluster around 31 March and 31 December.
Is year end and tax year end the same thing
This trips up more directors than any other point on the subject. The UK personal tax year ends on April 5. A limited company’s year end is whatever its accounting reference date says it is.
A company with a 30 September year end has a corporation tax accounting period running to 30 September, entirely separate from the 5 April date governing the director’s own dividend income and personal allowances. Both matter. They run on different clocks, and remuneration planning has to respect each of them.
What size is the company? Thresholds changed in April 2025
Company size drives the reporting framework, the disclosure level and the audit requirement. The monetary thresholds were lifted by roughly 50% for financial years beginning on or after 6 April 2025 under The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024, the first change since 2013.
| Category | Turnover (previous) | Balance sheet total (previous) | Employees | Typical framework |
|---|---|---|---|---|
| Micro-entity | Up to £1m (was £632,000) | Up to £500,000 (was £316,000) | Up to 10 | FRS 105 |
| Small | Up to £15m (was £10.2m) | Up to £7.5m (was £5.1m) | Up to 50 | FRS 102 Section 1A |
| Medium | Up to £54m (was £36m) | Up to £27m (was £18m) | Up to 250 | FRS 102 |
| Large | Above medium limits | Above medium limits | Above 250 | FRS 102 or IFRS |
A company qualifies for a category by meeting two of the three criteria. Azets estimates around 14,000 companies and LLPs moved from medium-sized to small on the back of the uplift, and the government put the annual saving to business at £240.2m. For a practice, the practical effect is that some clients dropped out of audit and into a lighter disclosure regime without doing anything at all.
What are statutory accounts
The output of the year end closing process is a set of statutory accounts. For a small company these comprise:
- A profit and loss account showing turnover, costs and profit for the period
- A balance sheet showing assets, liabilities and shareholders’ funds at the reference date Notes accompanying the financial statements, including the accounting principles adopted.
- A directors’ report, where required
Those figures then feed the corporation tax computation. Accounts are never filed more than once from the start, which is why an error in the accounts can subsequently result in a tax mistake after several weeks.
What does the year end closing process in accounting involve?
Most business owners picture a single event. In practice it is four stages especially when you look at the charge for year-end accountants, and the first one carries most of the weight.”
Stage one: closing the books
Nothing meaningful happens until the underlying records are complete and reconciled.
Reconciliations
Each banking account is balanced against the final statement. Trade debtors and creditors are agreed to supporting schedules. VAT control accounts are reconciled to the returns actually submitted for the period, and any difference is investigated rather than journalled away. Payroll control accounts are agreed to the RTI submissions and to what was paid across to HMRC.
Unreconciled control accounts are the single most common reason a year end job stalls.
Cut-Off
Cut-off testing establishes that income and costs sit in the year they belong to. An invoice raised on 2 October for work completed in September belongs in the September accounts. A supplier invoice dated after the year end for goods received before it belongs in the earlier period. Cut-off is where profit is either fairly stated or quietly distorted.
Stock
Where a business holds stock, a count should be performed as close to the reference date as the operation allows, then valued at the lower of cost and net realisable value. Slow-moving and obsolete lines need writing down. A stock figure carried forward on last year’s number plus a percentage is not a stock figure, it is a guess.
Stage two: adjustments and judgements
Bookkeeping records cash and invoices. Accounts record economic reality, and closing the gap between the two takes judgement.
| Adjustment | What it does | What happens if it is missed |
|---|---|---|
| Accruals | Recognises costs incurred but not yet invoiced | Profit and tax overstated |
| Prepayments | Carries forward costs paid in advance | Profit understated, margin distorted |
| Accrued income | Recognises work performed but not yet billed | Turnover understated, WIP invisible |
| Depreciation | Writes down fixed assets over useful life | Balance sheet overstated |
| Capital allowances | Replaces depreciation for tax purposes | Relief lost or claim overstated |
| Bad debt write-off | Removes irrecoverable balances | Debtors overstated, tax paid on income never received |
| Provisions | Recognises obligations existing at the reference date | Liabilities understated |
| Stock adjustment | Restates closing stock to actual count and value | Direct, pound-for-pound error in gross profit |
Fixed assets and capital allowances
Additions are capitalised against the company’s capitalisation policy; disposals are removed with any profit or loss on sale recognised, and depreciation is charged. Depreciation is then added back in the tax computation and replaced with capital allowances, including the Annual Investment Allowance of £1m per year and, for qualifying new plant and machinery, full expensing at 100%.
Director’s loan account
An overdrawn director’s loan account is one of the few year end items with a hard tax consequence attached.
| Position at year end | Consequence |
|---|---|
| Balance cleared within 9 months and 1 day | No section 455 charge |
| Balance outstanding beyond that date | Section 455 charge at 33.75% of the outstanding balance |
| Balance above £10,000 during the year | Benefit in kind unless interest is charged at the official rate |
| Balance repaid then redrawn shortly after | Anti-avoidance rules may deny the relief |
This is worth reviewing before the year end closes, not after.
Stage three: preparing the statutory accounts
Adjusted figures are mapped into a compliant format, generally FRS 102 Section 1A for small entities or FRS 105 for micro-entities. Disclosures are drafted, accounting policies stated, comparatives agreed to last year’s filed accounts, and the file is reviewed. Directors approve and sign the balance sheet.
Stage four: tax computation and filing
The corporation tax computation converts accounting profit into taxable profit. Disallowable expenditure is added back, capital allowances claimed, losses relieved or carried forward, and reliefs such as R&D applied where the company qualifies.
| Taxable profits | Rate | Notes |
|---|---|---|
| Up to £50,000 | 19% | Small profits rate |
| £50,001 to £250,000 | 25% less marginal relief | Effective marginal rate of 26.5% on profits in the band |
| Above £250,000 | 25% | Main rate |
Both thresholds are divided by the number of associated companies, which catches directors running more than one entity. Two associated companies halve the lower limit to £25,000.
What are the UK year end deadlines?
Four dates matter, and they do not fall together. The table below works through a company with a 31 March 2026 year end.
| Obligation | Filed with | Deadline rule | Date for a 31 March 2026 year end |
|---|---|---|---|
| Statutory accounts | Companies House | 9 months after the reference date | 31 December 2026 |
| Corporation tax payment | HMRC | 9 months and 1 day after the year end | 1 January 2027 |
| Company tax return (CT600) | HMRC | 12 months after the year end | 31 March 2027 |
| Confirmation statement | Companies House | At least once every 12 months | Company specific |
First accounts follow a different rule: 21 months from incorporation, or three months from the accounting reference date, whichever is later. Companies with taxable profits above £1.5m pay corporation tax by quarterly instalments rather than on the single date above.
Note the sequence. Payment falls three months before the return that calculates it, which is why a reliable estimate is needed well ahead of the filing deadline.
What are the penalties for late filing
| How late | Private company | Private company, late two years running | Public company |
|---|---|---|---|
| Up to 1 month | £150 | £300 | £750 |
| 1 to 3 months | £375 | £750 | £1,500 |
| 3 to 6 months | £750 | £1,500 | £3,000 |
| More than 6 months | £1,500 | £3,000 | £7,500 |
Penalties are issued automatically. Poor administration and reliance on a third party are not accepted as reasonable excuses. Non-filing is also a criminal offence under the Companies Act 2006, and directors can be prosecuted personally.
The enforcement trend
The direction of travel is worth showing rather than describing.
| Measure | Figure |
|---|---|
| Companies fined for filing more than 6 months late, 2019/20 | 3,418 |
| Companies fined for filing more than 6 months late, 2023/24 | 11,463 |
| Penalties issued, 2024/25 | 297,682 |
| Value of penalties issued, 2024/25 | £157.2m |
| Doubled penalties for consecutive-year lateness, 2024/25 | 75,062 |
| Directors prosecuted for non-payment, 2023/24 | 987 |
Financial Times analysis of the 2023/24 year found that only around 46% of the penalty value issued was actually collected, which has prompted questions about enforcement. Directors should not read that as a soft landing. Companies House gained enhanced powers under the Economic Crime and Corporate Transparency Act 2023 and added close to 500 staff, and unpaid penalties can lead to strike-off proceedings that end the company as a legal entity.
What does your accountant actually do at year end?
Clients tend to see the last two weeks of a job that ran for six. The visible part is a request for records, a query list, and a set of accounts to sign. The work behind it looks different.
| What the client sees | What is actually happening |
|---|---|
| A records request | Scoping the file, identifying which balances need substantive testing |
| A list of queries | Cut-off testing, reconciliation breaks, unexplained ledger movements |
| A draft set of accounts | Framework selection, size assessment, disclosure drafting, comparatives agreed |
| A tax figure | Add-backs, capital allowances, loss relief, associated company review |
| A signature request | Directors’ approval, audit exemption statement, iXBRL tagging |
| A short conversation | Margin analysis, loan account position, remuneration planning |
Testing the numbers rather than accepting them
An accountant agrees the bank to statements, tests cut-off around the reference date, recalculates accruals, reviews aged debtors for recoverability, checks that VAT returns reconcile to the ledger, and looks for entries that do not behave the way the rest of the file does. Round-sum journals. Suspense balances. Gross margin moving several points without an operational reason.
Getting the tax right in both directions
Claiming what the company is entitled to and disallowing what it is not. The second half protects the client. An overstated claim discovered later attracts penalties on top of the tax, and interest runs from the original due date.
The final part is the one clients value most in hindsight. Where margin moved and why. Whether the salary and dividend mix still works after the April 2026 dividend rate increases. Whether the loan account needs clearing before the section 455 date. Whether a capital purchase should sit in this period or the next.
What are the changes from Companies House in April 2028
On 9 June 2026 the government confirmed the final package of accounts reforms under the Economic Crime and Corporate Transparency Act 2023, moving the start date from April 2027 to April 2028 to give companies longer to prepare. ICAEW reported the confirmation the same day.
| Area | Position now | From April 2028 |
|---|---|---|
| Small company P&L | Optional to file | Must be filed, with an option to keep it off the public register |
| Micro-entity P&L | Not filed | Must be filed |
| Abridged accounts | Available | Removed |
| Filing route | Web, software or paper | Commercial software only, iXBRL tagged |
| Audit exemption | Standard statement | Strengthened directors’ eligibility statement naming the exemption |
| Component filings | Can be filed separately | Must be filed together |
| Shortening the reference period | Broadly unrestricted | Limited, with a business reason required for repeat changes |
The joint HMRC and Companies House filing service closed on 31 March 2026, so companies still relying on free web filing for accounts should treat software adoption as a live project rather than a 2028 one.
A practical pre year end checklist
The most valuable work happens in the weeks before the reference date, not after it.
| Action | When | Why it matters |
|---|---|---|
| Raise all outstanding sales invoices | Before year end | Turnover and debtors stated correctly |
| Review aged debtors | 6 to 8 weeks before | Genuine write-offs land in the right period |
| Claim personally paid expenses and mileage | Before year end | Relief lost if left unrecorded |
| Run the final payroll and any bonus | Before year end | Deduction falls in the current period |
| Review salary and dividend mix | 6 to 8 weeks before | Dividend rates rose from 6 April 2026 |
| Check the director’s loan account | 8 weeks before | Section 455 and benefit in kind exposure |
| Count stock | As near year end as possible | Direct effect on gross profit |
| Bring forward planned equipment purchases | Before year end | Accelerates capital allowances by a full year |
| Make company pension contributions | Before year end | Deductible in the period paid |
| Confirm any share or director changes | Before year end | Disclosure and confirmation statement accuracy |
Once the year end passes, most of these become historical facts. Before it, they are decisions.
How UK practices are handling year end capacity
For accounting firms the problem is rarely technical. It is that a large share of UK companies carry a 31 March or 31 December reference date, which compresses preparation work into predictable peaks while the same team handles personal tax, payroll and MTD for Income Tax obligations. Add the software filing transition ahead of April 2028 and the peak gets no easier.
Outsourced year end accounts providers gives practices a way to absorb those peaks without permanent recruitment. AcoBloom International works to UK reporting standards, preparing accounts files under FRS 102 Section 1A and FRS 105 with corporation tax computations attached, delivered ready for partner review. The judgement, client relationship and sign-off stay in the practice. The preparation load does not have to.
Frequently Asked Questions
It is the last day of a company’s accounting period. From that date, twelve months of transactions are closed off and turned into statutory accounts, which then drive the corporation tax return.
Yes. Under current rules a company can shorten its accounting reference period as often as it likes and lengthen it to a maximum of 18 months once every five years, subject to exceptions. Companies House will restrict repeated shortening from April 2028.
Where the bookkeeping is complete and reconciled, two to four weeks is typical for a small company. Where records need rebuilding, it runs considerably longer. The quality of the underlying records is the largest single variable.
Before. Payment falls nine months and one day after the year end, while the CT600 is not due until twelve months after it.
Companies House issues an automatic penalty from £150 for a private company, rising to £1,500 beyond six months and doubling where the company also filed late the previous year. HMRC applies separate penalties for a late CT600, plus interest on unpaid tax.
Yes. Dormant companies file dormant accounts with Companies House and remain within scope of the software filing requirement from April 2028.
Not at present. Small companies can continue to file filleted accounts. From April 2028 a profit and loss account will be required, though the government has confirmed an option to keep it off the public register.
Yes. For financial years beginning on or after 6 April 2025 the turnover and balance sheet limits rose by around 50%. Some companies moved down a size category without any change in trading.
