Financial Year vs Tax Year Difference
What is the difference between the UK Tax Year (6 April to 5 April), Financial Year (1 April to 31 March), and Company Accounting Period? Apportionment rules and deadlines.
In one sentence
The UK Tax Year (6 April-5 April) applies to personal income and sole traders, while the Financial Year (1 April-31 March) applies to Corporation Tax rate settings and limited companies use custom 12-month accounting periods.
Quick answer
- UK Tax Year: 6 April to 5 April (Self Assessment, PAYE, Personal Allowance)
- Financial Year: 1 April to 31 March (Corporation Tax rates and government budget settings)
- Company Accounting Period: Custom 12 months based on incorporation date
- Company profits straddling 31 March are daily-apportioned between financial years
Financial year vs tax year: What is the difference in the UK?
For UK business owners, sole traders, and company directors, understanding the difference between the Tax Year, the government Financial Year, and your company's Accounting Period is critical for tax compliance.
Mixing up these dates leads to missed HMRC filing deadlines, incorrect tax return calculations, and unexpected late payment penalties.
Key differences at a glance
| Year type | Exact date range | Who does it apply to? | Main tax filings |
|---|---|---|---|
| UK Tax Year | 6 April to 5 April | Individuals, Sole Traders, Partners, Employees | Self Assessment (SA100), PAYE P60s, Class 2/4 NI |
| Financial Year (HMRC) | 1 April to 31 March | Government & Corporation Tax Rate setting | Corporation Tax rates (19% / 25%) & budget updates |
| Company Accounting Period | Custom 12 months (e.g. 1 Jan to 31 Dec) | UK Limited Companies & LLPs | Statutory Accounts (Companies House) & CT600 Return |
1. The UK Tax Year (6 April to 5 April)
The UK personal tax year runs strictly from 6 April to 5 April the following year. This calendar date dates back to the calendar reform of 1752 and applies to:
- Self Assessment Returns: Reporting untaxed income, dividends, capital gains, and rental income.
- PAYE & Payroll: Employer tax codes, P60 annual summaries, and P11D benefit reporting run on this cycle.
- Individual Allowances: Your £12,570 Personal Allowance, £500 Dividend Allowance, and Capital Gains Tax exemption reset every 6 April.
2. The Government Financial Year (1 April to 31 March)
The UK Government's financial year runs from 1 April to 31 March. HMRC and HM Treasury use this period to set corporate tax policy, budget changes, and statutory allowances.
When HMRC announces changes to Corporation Tax rates (such as the 19% Small Profits Rate or 25% Main Rate), the new rates take effect on 1 April at the start of the financial year.
3. Company Accounting Period (Company Financial Year)
When you incorporate a limited company at Companies House, your company is given an Accounting Reference Date (ARD), usually set to the last day of the month in which the company was formed.
Your company financial year runs for 12 months ending on your ARD (for example, 1 July to 30 June). Unlike individuals, a limited company can choose to change its financial year end by filing Form AA01 at Companies House.
What happens when a company year straddles 31 March?
If your limited company accounting period spans across 31 March when Corporation Tax rates change, HMRC requires you to apportion your company profits on a daily basis between the two financial years.
Example Apportionment Calculation:
A company with a financial year ending 31 December 2026 has 90 days in Financial Year 2025 (up to 31 March) and 275 days in Financial Year 2026 (from 1 April). Profits are split proportionally to apply the correct tax rates for each period.
Basis Period Reform for Sole Traders
Historically, sole traders could choose any accounting year-end date (e.g. 31 December) and pay tax under the "current year basis".
Under HMRC's Basis Period Reform, all sole traders and partnerships are now taxed on profits arising in the actual tax year (6 April to 5 April), regardless of their accounting year end. This aligns sole traders for Making Tax Digital (MTD) for Income Tax.
Read our guide on UK Tax Calendar dates & filing deadlines or see how our year-end accounts & Corporation Tax service keeps your company compliant.
Unsure about your accounting year end or tax deadlines?
Book a 20-minute call with an experienced UK accountant. We will review your accounting reference dates, Corporation Tax calculations, and filing schedule.
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