Year-End Accounts: What to Expect and How to Prepare

For many business owners, year-end accounts feel like a daunting annual task — a pile of paperwork, a flurry of deadlines, and a bill from an accountant at the end of it. But with the right preparation and a clear understanding of what's involved, your year-end can be straightforward, stress-free, and even a genuinely valuable exercise for your business. Here is everything you need to know.

What Are Year-End Accounts?

Year-end accounts are the official financial summary of your business for a 12-month accounting period. For limited companies, they must be filed with both Companies House and HMRC each year. They are not simply a tax return — they are a formal set of financial statements prepared in accordance with UK accounting standards (typically FRS 102 or FRS 105 for micro-entities).

Year-end accounts typically include:

• Profit and Loss Statement (P&L) — a summary of your income, expenses, and net profit or loss over the year. Note that whether this is published publicly depends on your company size — micro-entities are generally not required to file their P&L with Companies House, though the rules around this have tightened in recent years.

• Balance Sheet — a snapshot of what your business owns (assets) and owes (liabilities) on the final day of your accounting year, along with the net equity of the business.

• Notes to the Accounts — additional disclosures required by law, such as details of loans, directors' transactions, and accounting policies used.

• Director's Report — required for companies above the micro-entity threshold, providing a brief commentary on the business's performance and outlook.

• Corporation Tax Computation — a separate calculation prepared alongside the accounts showing how your taxable profit is derived and how much Corporation Tax is owed.

Most small and micro-entity limited companies can file simplified accounts with Companies House. However, since the Economic Crime and Corporate Transparency Act came into force, small companies can no longer file 'filleted' accounts that omit the Profit and Loss — more financial detail is now visible on the public register than before.

When Is Your Year-End?

Your company's year-end date — known as the Accounting Reference Date (ARD) — is set when the company is incorporated, defaulting to the last day of the month 12 months after registration. For example, a company incorporated in March will have a default ARD of 31 March each year. You can apply to change your ARD, though there are restrictions on how often this can be done. Sole traders and partnerships follow the tax year (6 April to 5 April) for their accounts.

Key Deadlines to Know

Missing year-end deadlines triggers automatic penalties, so knowing your dates is essential:

• Companies House filing deadline: 9 months after your ARD. For a 31 March 2026 year-end, this means filing by 31 December 2026.

• Corporation Tax payment deadline: 9 months and 1 day after your accounting year-end. This falls before the CT600 filing deadline — a common source of surprise.

• Corporation Tax return (CT600): 12 months after the end of your accounting period. This must be filed even if you made a loss or have no tax to pay.

• Self-Assessment (sole traders and directors): 31 January online, or 31 October for paper returns, following the end of the tax year on 5 April.

• P60s to employees: Must be issued by 31 May following the tax year end.

• P11D (benefits in kind): Filed with HMRC by 6 July, with Class 1A National Insurance due by 22 July.

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What Are the Penalties for Late Filing?

Companies House penalties for late accounts start at £150 for up to one month late and rise to £1,500 for more than six months late — and these amounts double if your accounts are late two years in a row. HMRC penalties for a late Corporation Tax return start at £100 immediately, rising to £200 after three months, with tax-geared penalties of 10% of the unpaid tax applied at six and twelve months. Interest is also charged on any Corporation Tax paid late.

What Does Corporation Tax Look Like in 2026?

Corporation Tax in 2026 operates on a tiered structure based on your company's taxable profits:

• Small profits rate: 19% on profits up to £50,000.

• Marginal relief: Available for profits between £50,001 and £250,000, tapering the effective rate between 19% and 25%.

• Main rate: 25% on profits above £250,000.

If your company has associated companies, the thresholds are divided between them, which can push you into a higher band sooner than expected. Your accountant will factor this into your Corporation Tax computation.

How to Extract Profit Tax-Efficiently

Year-end accounts are also the right time to review how you are taking money out of the business. For owner-managed limited companies, the most common approach is a combination of a low salary (typically up to the National Insurance threshold) and dividends from profits. With the dividend allowance now reduced to just £500 and dividend tax rates having increased, it is more important than ever to plan this carefully.

Your year-end accounts give you the definitive picture of distributable profits — the amount you can legally pay as dividends — so they are a key input into any profit extraction planning.

What Should You Be Doing Before Year-End?

The earlier you start preparing, the smoother the process will be. In the months before your year-end, work through the following checklist:

• Reconcile your bank accounts — make sure every transaction is recorded and your bookkeeping matches your bank statements. Discrepancies are far easier to resolve before year-end than after.

• Review outstanding invoices and bad debts — chase unpaid invoices and consider formally writing off any genuinely irrecoverable debts before year-end, which can reduce your taxable profits.

• Capture all allowable expenses — review the year and ensure all legitimate business expenses are recorded, including mileage, home working costs, professional subscriptions, training, and equipment.

• Consider the timing of capital expenditure — purchasing equipment, vehicles, or other assets before year-end may allow you to claim Annual Investment Allowance (AIA) in the current year, reducing your Corporation Tax bill.

• Review directors' loan accounts — if you owe money to the company via a director's loan account, clearing it before year-end avoids a 33.75% Section 455 tax charge on overdrawn balances outstanding nine months after year-end.

• Check your VAT records — ensure your VAT returns reconcile with your accounts and that any VAT on expenses has been correctly reclaimed.

• Reconcile your payroll records — ensure your payroll figures match your PAYE payments to HMRC and that all employee records are accurate.

• Ensure your digital records are in order — under Making Tax Digital, digital record-keeping requirements are increasing. Well-organised records speed up the accounts preparation process and reduce the risk of errors.

• Speak to us to ensure a smooth process in managing your year-end procedures.

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What Happens to Your Payroll at Year-End?

The payroll tax year runs from 6 April to 5 April — separately from your company's accounting year-end. At the close of each payroll year, the following must be completed:

• Final Full Payment Submission (FPS) — your last payroll submission of the year must be marked as final, confirming to HMRC that the tax year is closed.

• P60s — every employee still employed on 5 April must receive their P60 by 31 May. This is a statutory requirement.

• P11Ds — any benefits in kind provided to employees (company cars, private medical insurance, etc.) must be reported to HMRC by 6 July.

• Employer Payment Summary (EPS) — used to report any statutory payments reclaimed through payroll, such as SMP or SSP.

If Crown Payroll Services manages your payroll, we handle all year-end payroll submissions, P60s, and HMRC reporting on your behalf as standard — your accountant simply needs the final payroll figures to complete your accounts.

Is Year-End the Same as Tax Year-End?

No — and this is a common source of confusion. Your company's accounting year-end is set by Companies House and can fall on any date. The UK tax year always ends on 5 April, regardless of when your company's year-end falls. Your Corporation Tax return covers your accounting year, while PAYE and personal tax follow the 6 April to 5 April tax year. These two calendars run in parallel, and it is important to keep them separate in your planning.

Using Your Year-End Accounts as a Business Tool

Your year-end accounts should not simply be a historical record — they are one of the most powerful planning tools your business has. A good set of accounts will tell you:

• Which areas of your business are most profitable and which are draining resources.

• Whether your gross and net margins are improving or declining year on year.

• How much cash the business is generating versus how much profit it is reporting — the two are not the same.

• How your business compares to sector benchmarks.

• Whether you are in a strong enough financial position to take on new staff, invest in growth, or apply for finance.

In 2026, with frozen tax thresholds and rising employment costs, small decisions around the timing of expenditure, profit extraction, and investment can have a larger-than-expected tax impact. The best time to plan for next year is right after your accounts are finalised.

How Crown Payroll Services Can Help

A clean, accurate accounting and payroll service is the foundation of a smooth year-end. When your figures are looked after perfectly, we complete your accounts more quickly, with less back-and-forth — which typically means lower accountancy fees and fewer delays.

At Crown Payroll Services, we ensure your your records are accurate and up to date throughout the year, handle all in year queries and processes, and provide you with the clean, reconciled data to get your accounts done efficiently.

Call us on 01942 644864 or email hello@crownpayrollservices.co.uk to find out how we can support your business through year-end and beyond.