Year-end accounts, tax computations and working papers, answered.

Year-end accounts are the financial statements a business prepares at the end of its financial year: a profit and loss account for the year and a balance sheet at the year-end date, with notes. For a limited company they are the statutory accounts filed at Companies House and sent to HMRC with the Company Tax Return. For a sole trader they are not filed anywhere, but they are the basis of the figures on the Self Assessment return.

Preparing year end accounts runs in this order: bring the bookkeeping up to date and reconcile the bank; post the year-end adjustments (accruals and prepayments, depreciation, stock, bad debts, the tax charge); check every balance sheet figure against evidence in the working papers; agree the extended trial balance; then draw up the accounts under the right framework and have the directors approve them. The working papers are where most of the time goes, and they are the part PrepIQ prepares.

The core of one: bank and cash reconciled to the statements; sales and purchase ledgers agreed to the control accounts; VAT and payroll control accounts cleared to the returns; fixed asset additions and disposals recorded, with depreciation and capital allowances; accruals, prepayments and deferred income posted; stock counted and valued; loans and HP agreed to lender statements; the director's loan account and dividends checked; the tax charge computed; and last year's closing balances tied to this year's opening balances.

The year end accounts deadline for a private limited company is 9 months after its accounting reference date (its year end). A company's first accounts are due 21 months after incorporation, or 3 months after the accounting reference date if that is later. The Company Tax Return is due 12 months after the end of the accounting period, but the corporation tax itself is usually payable 9 months and one day after it.

Late filing at Companies House carries an automatic penalty for a private company: £150 up to a month late, £375 up to three months, £750 up to six months and £1,500 beyond that. The penalty is doubled if the accounts are late two years in a row.

Once the directors have approved the accounts, file them at Companies House (online, or through commercial accounting software) and file the CT600 Company Tax Return with HMRC, which needs the accounts and the tax computation in iXBRL. Companies House has said that from 1 April 2028 all accounts must be filed through commercial software. A micro-entity can file just its balance sheet and notes at Companies House. PrepIQ prepares the working papers behind the accounts; filing is done from your accounts production and tax software.

What year-end accounts cost depends mostly on the state of the records, the number of transactions, whether it is a sole trader or a limited company, and what is included: the accounts alone, or also the corporation tax return, the directors' Self Assessment returns and bookkeeping catch-up. There is no standard scale of fees for accountants in the UK; each practice sets its own. A practice's own cost is mostly the hours spent building the working papers, which is the part PrepIQ shortens. Ask for a fixed quote that says exactly what is covered.

For 6 years from the end of the last company financial year they relate to, and longer if a transaction spans more than one accounting period, the company bought something expected to last more than 6 years, the Company Tax Return was filed late, or HMRC has started a compliance check. A good set of year-end working papers is the easiest way to show how each figure was reached when someone asks.

You can: there is no legal requirement to use an accountant, and the directors are responsible for the accounts whoever prepares them. In practice the accounts must follow the right framework (FRS 105 for a micro-entity, FRS 102 Section 1A for a small company), the tax computation must be right, and both must be filed in the correct format and on time. Most directors use an accountant for that reason.

Statutory accounts are the annual accounts a limited company must prepare under the Companies Act 2006: at least a balance sheet and a profit and loss account with notes, prepared under UK accounting standards and approved by the directors. They go on the public register at Companies House and to HMRC with the tax return. Preparing statutory accounts starts from a signed-off trial balance and the working papers behind it. Final statutory accounts simply means the approved version, as opposed to a draft.

Statutory accounts are a legal requirement: annual, in a set format, for shareholders, Companies House and HMRC. Management accounts are optional internal reports, usually monthly or quarterly, in whatever format helps the owners run the business, with comparisons, ratios and commentary. LedgerIQ produces management accounts; PrepIQ prepares the working papers behind the statutory ones.

Micro-entity accounts are the simplest statutory accounts a UK company can prepare, under FRS 105. A company qualifies as a micro-entity if it meets two of three conditions: turnover of £1 million or less, £500,000 or less on its balance sheet, and 10 employees or less. It can prepare simpler accounts that meet the statutory minimum and send only a balance sheet with less information to Companies House.

Our guide to micro-entity accounts goes through the format line by line.

The requirements for micro-entity accounts are a short balance sheet (fixed assets, current assets, creditors due within and after a year, net assets, and capital and reserves), a profit and loss account that is not filed on the public record, and a few required notes: advances and credit to directors, financial commitments, guarantees and contingencies, and the average number of employees. The balance sheet carries the audit exemption statements and a statement that the accounts were prepared under the micro-entity provisions. There is no cash flow statement.

Micro-entity accounts use FRS 105, with very limited notes, and the law presumes them to give a true and fair view. Abridged accounts are small company accounts under FRS 102 Section 1A in which the balance sheet and profit and loss are shortened, with the consent of all the members. Companies House has said abridged accounts will no longer be available once its accounts reforms take effect.

A UK company is small if it meets two of three: turnover of £15 million or less, £7.5 million or less on its balance sheet, and 50 employees or less. Small companies usually prepare accounts under FRS 102 Section 1A and can claim audit exemption. In Ireland the small company thresholds are turnover not exceeding €15 million, balance sheet not exceeding €7.5 million and an average of 50 employees.

Under the Economic Crime and Corporate Transparency Act, Companies House has confirmed that from 1 April 2028 all accounts are filed through commercial software, micro-entities and small companies also file a profit and loss account, and abridged accounts are withdrawn. Companies House has said details, such as how a company may keep its profit and loss off the public register, will be confirmed later, so check its guidance before you rely on the detail.

A tax computation takes the profit in the accounts and adjusts it to the profit that tax is charged on. It adds back costs the tax rules do not allow, such as depreciation and client entertaining, deducts capital allowances instead, deals with losses, and then applies the rates. For a company it supports the CT600 Company Tax Return; for a sole trader it supports the self-employment figures on the Self Assessment return.

Start from the profit before tax, add back disallowable items, deduct capital allowances to reach taxable total profits, then apply the rate. Profits of £50,000 or less pay the small profits rate of 19%. Profits over £250,000 pay the main rate of 25%. In between, the main rate applies less marginal relief, which phases the rate in. The two limits are reduced for short accounting periods and shared between associated companies. In the example below, taxable profits of £120,000 carry £28,050 of corporation tax. To check a figure quickly, use the free corporation tax calculator.

On profit, never on turnover. The rate depends on the size of the profit: 19% for profits up to £50,000, 25% for profits over £250,000, and the 25% rate less marginal relief in between, so the effective rate rises gradually from 19% to 25%.

Every computation follows the same layout: profit before tax, adjustments added back and deducted, capital allowances, taxable total profits, then the tax at the rates with any marginal relief, as in the worked example under C2. PrepIQ builds the computation as a schedule in the working papers, linked to the trial balance, rather than as a separate template to fill in.

Plant and machinery qualifies for the annual investment allowance (AIA) up to £1 million a year, and anything not covered goes into a pool and gets a writing down allowance. The main pool rate is 14% from 1 April 2026 for corporation tax (6 April 2026 for income tax), down from 18%, and a period that straddles the change uses a time-apportioned rate. The special rate pool stays at 6%. Cars do not get the AIA.

The business part does: the accounts profit is adjusted for disallowable items and capital allowances to the taxable trading profit. That figure then goes on the self-employment pages of the Self Assessment return, where personal allowances, income tax bands and National Insurance apply to the individual. PrepIQ prepares the business accounts and drawings for a sole trader; the personal tax return is done in your tax software.

Working papers are the accountant's evidence file for the year end. There is one schedule per area of the balance sheet and the tax charge (fixed assets, debtors, creditors, accruals and prepayments, bank, loans, VAT, payroll, tax), and each one starts from the figure in the trial balance and shows the workings and documents that support it. A reviewer reads them before the accounts are approved, and HMRC will ask for them first in an enquiry.

In an audit, the working papers are the auditor's own file: what was tested, what evidence was seen and what the auditor concluded, kept so that a second auditor could re-perform the work. The working papers PrepIQ builds are a different thing: they show how the accounts were put together. Most small companies are exempt from audit, so for them the preparation file is the one that matters.

A set usually has a permanent file (the business, its structure, key agreements and accounting policies, carried from year to year) and a current file for the year. In the current file you will find the extended trial balance, a lead schedule for each area, supporting schedules (fixed asset register, aged debtors and creditors, accruals and prepayments, loan and HP schedules), reconciliations (bank, VAT, payroll, control accounts), the tax computation, a query register and a completion or review checklist.

Head it with the client, the year end, the area and a reference. State the objective, show the figure from the trial balance, set out how it was built up, cross-reference each part to its evidence and to the lead schedule, record any adjustment as a journal, and note open points as queries. Initial and date it when it is prepared and when it is reviewed. Keep each figure linked back to the trial balance, so a change in one place flows through.

Many practices keep their own Excel working papers template, and accounts production packages ship with theirs. Xero, QuickBooks and Sage hold the bookkeeping but do not produce year-end working papers. PrepIQ prepares into your firm's own template if you upload it, or into its built-in template, from the client's ledger export and paperwork.

PrepIQ prepares year-end working papers for accountants in the UK and Ireland. From a client's ledger and paperwork, RiQ builds the whole file: extended trial balance, lead schedules, fixed assets and capital allowances, debtors, creditors, accruals and prepayments, bank, loans and HP, VAT, payroll, dividends and the director's loan account, and the tax computation, with every figure cell-linked to the trial balance and tied out before it reaches you.

No. The preparation of statutory accounts happens in your accounts production software; PrepIQ produces what sits underneath them: an extended trial balance that balances, a lead schedule for each area, the year-end journals and the corporation tax computation, prepared to FRS 102 Section 1A or FRS 105 as you choose. Once you sign it off, the trial balance goes into your accounts production software, which formats the statutory accounts and files them.

The client's bookkeeping export, plus the paperwork behind it: bank statements, HP and loan agreements, completion statements, invoices and certificates, in any format. Optionally, last year's working papers as an Excel file, so RiQ carries the closing balances forward and proves they tie, and your firm's working papers template. A short note on anything unusual saves a re-run. If the books are in IQ Books there is no export: start from Accounting, Year-end close.

The computation, yes; the filing, no. The tax schedule adjusts the profit, applies the 19% and 25% rates with marginal relief, allows for associated companies and splits a period that spans two financial years. Your firm settings decide whether it also posts the tax charge as a journal, prepares it without one, or leaves tax to you. The CT600 itself is filed from your tax software.

Both. A sole trader's file carries drawings, capital and the split of the profit for the self-assessment return; a limited company's file carries the corporation tax charge, dividends against distributable reserves and the director's loan account.

You do, always. RiQ flags every judgement and puts open points on a query register, and can draft a client query email. You review the set, send follow-ups with Ask RiQ to revise the same set, then sign off and finish the job. Finishing removes the client's files.

Yes, for clients kept in IQ Books. Start the job from Accounting, Year-end close, and when it is ready its adjusting journals appear in step 2 for you to review line by line before anything posts. For any other platform the working papers and journals come back as files.

PrepIQ is live on the ReconcileIQ practice plans, Practice Essential and above; Starter and Accountant do not include it. Each year-end job draws 5,000 credits from your plan with the default RiQ engine, or 10,000 at RiQ maximum, which is worth it for complex or messy records. Each later Ask RiQ revision is a quarter of the job: 1,250 credits at default, 2,500 at maximum. Open PrepIQ to start a job.

Yes. Your practice picks its tax jurisdiction, United Kingdom or Ireland, and the set comes back on that rulebook and in that currency. Irish sets follow Revenue and CRO conventions: corporation tax at 12.5% on trading income and 25% on non-trading income with no marginal relief, the CT1 and the balance of tax due nine months after the period end (by the 23rd of the month), the close company surcharge, wear and tear at 12.5% over eight years, and section 438 on a loan to a participator. More on Irish year ends.

The United Kingdom. Northern Ireland companies are registered at Companies House, pay UK corporation tax to HMRC and file a CT600, so they use PrepIQ's UK setting.

Documents are processed privately for the job and removed when the job is finished. Finishing a signed-off job also frees a slot for a new one.