Y is for Year End
There can often be confusion with when your business financial year end is.
Sole traders, partnerships and individuals have to report to the UK’s tax year which runs from the 6th of April to the 5th of April the following year. This is called the basis period.
It is most recommended to have your financial year end in line with this.
However, if for any reason that this does not suit your business or industry you can choose to have a different financial year end, this is called accounting period.
You pay tax on the profit of the accounting period that ended within the tax basis period or tax year.
For limited companies it works differently
Limited companies financial year end is automatically determined by the month in which the company was first registered.
Although this can be changed if necessary.
Companies prepare their financial reports and corporation tax returns based on this.