A fiscal year is a 12-month period during which a company, government, or other organisation reports its finances and budgets.

The fiscal year can vary depending on the company and can include any one-year period. 

For instance, Schools start their fiscal year with the school year rather than the calendar year. The structure of the company and its accounting procedures are usually used to determine fiscal years.

What is the purpose of a fiscal year?

A fiscal year is often used for financial reporting and tax purposes. It can, therefore, be used to compare patterns, make budgetary decisions, and make management decisions.

Businesses would need to file financial statements for the end of their fiscal year to present to government officials and investors or shareholders.

Difference between an accounting year and a fiscal year

An accounting year is a year in which a company’s financial statements are organised for tax purposes.

On the other hand, a fiscal year is determined by the company to adhere to corporate activities, set targets, compare patterns from previous years, and collect financial data.

Fiscal Year in the UK

Businesses use the same financial year and the fiscal year in most cases, although this is not always the case.

The accounting year in the United Kingdom traditionally begins on April 6th and ends on April 5th. Depending on the corporation’s nature and its sales cycles, a company’s fiscal year can be a different 12 months span.

A fiscal year is frequently referred to by the numbers of the calendar years it covers; for example, the fiscal year that begins on April 6, 2021, and ends on April 5, 2022, is known as fiscal or tax year ‘2021/22.’

Fiscal year at the time of starting a business

Your fiscal and accounting years can be different when you first start a company, and they may be shorter or longer than a year.

Sign in to your HMRC business tax account to review your accounting year. Your fiscal year can be updated or kept separate if it differs from these dates.

Since your accounting year begins on the day your company is formed, it could be longer in the first year of operation. In this case, you will be required to file two tax returns. If the period is less than 12 months, you will only need to file one tax return.