A year end is the moment the books stop and the filings begin. For a sole trader it is 5 April; for a company it is the accounting reference date. The work that follows, accounts and tax returns, is faster, cheaper and more defensible when the records are complete and the decisions that have to be made before the date have been made. This checklist covers what to gather, what to check and what to decide, in the weeks either side of the year end, for both structures.
Six to eight weeks before: decisions that must be made in time
Decisions with tax consequences have to be made before the year end to count in it. For a company, consider capital expenditure: equipment, vehicles and software bought before the date qualify for the annual investment allowance or full expensing in this year's Corporation Tax computation rather than next. Consider employer pension contributions, which are deductible when paid, not when decided. Consider whether a bonus or dividend should fall this side of the date or the other, and whether the director's loan account needs clearing with a dividend before the nine-month section 455 deadline that follows the year end. Review the salary for the coming year against the new thresholds.
For a sole trader, the equivalents are equipment purchases before 5 April, personal pension contributions, which must be paid by 5 April to count in the tax year, timing of invoices under the cash basis where legitimate, and any capital disposals that would use this year's £3,000 Capital Gains Tax exemption. Our pre-year-end planning session at £299 runs through these on draft figures.
The week of the year end: cut-off
Record the stock count if you hold stock, at cost, with any damaged or obsolete items noted. List work in progress and uninvoiced work for businesses on the accruals basis. Note the mileage on business vehicles. Reconcile every bank account and card to the statement on the date. Ensure all sales invoices for work done to the date have been raised and all supplier invoices received have been entered, even if unpaid. Note cash in hand.
Records to gather
For every business: bank statements for all business accounts and cards covering the full year, sales records or invoices, purchase invoices and receipts, details of any loans and finance agreements with the year-end balances, details of assets bought or sold during the year, the previous year's accounts and tax return, and any HMRC or Companies House correspondence.
For a company additionally: payroll records and the year-to-date summaries, dividend vouchers and board minutes for every dividend paid, the director's loan account movements, VAT returns filed in the year, any pension contributions by the company, details of benefits in kind provided to directors or staff, and the register of members and PSC register if anything changed.
For a sole trader additionally: a P60 and any P45s if also employed, pension contribution certificates, Gift Aid donations, student loan details, Child Benefit received by the household if income is over £60,000, and records of any other income such as savings interest, dividends, rental income or capital gains.
Checks before handing over
Go through the bank statements and identify any personal spending that went through the business account and any business spending paid personally; both need recording correctly. Check that expenses are supported by receipts, especially larger ones. Confirm that any money you took from a company was processed as salary or dividend with paperwork, and not left as undocumented drawings. Check the VAT returns reconcile to the bookkeeping. Confirm the accounting reference date at Companies House is what you think it is. If the business used a vehicle, decide whether the mileage method or the actual-cost method was used and keep to it.
Questions your accountant will ask
Was there any income not through the bank? Any bad debts to write off? Any assets scrapped or sold? Any new loans, grants or capital introduced? Any change in the business, its structure or its ownership? Any HMRC letters? Any plans that affect next year, such as hiring, incorporating, registering for VAT or stopping? Answering these in advance shortens the whole process.
After the year end: the deadlines that follow
For a company, Corporation Tax is due nine months and one day after the year end, the accounts are due at Companies House nine months after it, and the CT600 is due twelve months after it. The confirmation statement is on its own cycle from incorporation. For a sole trader, the return and the tax are due by 31 January after 5 April, with payments on account on 31 January and 31 July. A company director's own Self Assessment follows the same January deadline. Use the deadline finder to list them.
What good records save
Our sole trader accounts fee is £149 from tidy records and £249 from a shoebox, and limited company accounts from a reconciled file take days rather than weeks. More importantly, complete records at year end produce a profit figure you can rely on, expense claims that stand up to an HMRC check, and a clear picture of what the business made and what it owes. The checklist takes an afternoon. The alternative takes January.
Getting it done
Sole trader accounts and limited company accounts are prepared from whatever you have gathered, with the Corporation Tax computation included for companies. The dividend vs salary calculator helps with the pre-year-end extraction decision, and a tax planning review makes it on your actual figures.
A worked example
A small limited company with a 31 March year end runs through the checklist in February. The director sees that the company's profit is heading for £54,000, just over the £50,000 small profits limit. She brings forward a planned £6,000 laptop and software purchase from April to March, claiming it in full under the annual investment allowance, and makes a £4,000 employer pension contribution before the year end. Taxable profit falls to £44,000, inside the 19% band, saving around £2,600 of Corporation Tax compared with doing both in April. She also notices that her director's loan account is £3,500 overdrawn from a holiday paid on the company card; she declares a dividend of £3,500 on 25 March, with a minute and a voucher, clearing the balance before the year end rather than facing the section 455 charge nine months later. On 31 March she counts the small stock of components, reconciles the bank, and sends the records on 10 April. The accounts are drafted by the end of April, nine months ahead of the Companies House deadline.
Common year-end omissions
Costs paid personally and never claimed back from the business. Equipment bought on a personal card. Cash sales recorded nowhere. Supplier invoices dated in the old year but received in the new one. Loan balances taken from memory rather than statements. Dividend vouchers written after the event. Each is fixable in April and expensive to fix in January.
Keeping it short next year
The fastest year end is the one where nothing has to be reconstructed. Monthly bookkeeping with bank feeds, receipts captured as they arrive and dividends documented when declared turns the checklist from a weekend's work into a confirmation that the records already say what they should. Our bookkeeping service from £49 a month exists for exactly that reason.