🔹 Introduction
The end of your financial year isn’t just about ticking off compliance boxes—it’s a crucial opportunity to review, plan, and improve your profitability. For contractors and construction firms, preparing year-end accounts involves more complexity than other industries: CIS, retentions, VAT, job costing, and equipment depreciation must all be considered. This guide breaks down the essentials of year-end accounting for UK contractors, including what to file, key deadlines, and how to avoid HMRC penalties.🔹 What Are Year-End Accounts?
Year-end accounts are financial statements prepared at the close of your company’s accounting year. They typically include:- Profit and Loss Statement
- Balance Sheet
- Director’s Report
- Corporation Tax Return (CT600)
- Confirmation Statement (Companies House)
- HMRC (for Corporation Tax)
- Companies House (for statutory accounts)
🔹 Year-End Checklist for Contractors
| Task | Purpose |
|---|---|
| Reconcile all bank accounts | Ensure income/expenses are accurate |
| Finalise invoices and job costs | Lock in project margins |
| Allocate retentions and accruals | Match income with project timelines |
| Review payroll, CIS, and VAT returns | Ensure correct tax positioning |
| Claim capital allowances | Maximise tax relief on tools and machinery |
| Finalise director’s salary/dividends | Optimise personal tax efficiency |
| Prepare final P&L and balance sheet | Required for HMRC and Companies House |
🔹 Construction-Specific Considerations
🔧 Work in Progress (WIP)
- Assess unbilled work
- Allocate part-finished projects to the correct year
🧾 Retentions
- Declare income when entitlement is clear—not just when paid
- Consider timing for Corporation Tax
🛠️ Capital Equipment
- Claim annual investment allowance (AIA) on plant, vans, or tools
- Review depreciation schedules
đź’· CIS Reconciliation
- Match subcontractor payments with monthly returns
- Reclaim overpaid deductions
🔹 Filing Deadlines
| Document | Deadline |
|---|---|
| Company accounts to Companies House | 9 months after year-end end |
| Corporation Tax return (CT600) | 12 months after year-end end |
| Corporation Tax payment | 9 months and 1 day after year-end end |
| Confirmation Statement | Annually, within 14 days of due date |
- Accounts to Companies House: by 31 December 2025
- Corporation Tax payment: by 1 January 2026
🔹 Tools to Streamline Year-End Accounting
- Xero: Integrated CIS, project accounting, real-time reports
- QuickBooks: Good for P&L, VAT, and payroll integration
- Dext (formerly Receipt Bank): Upload receipts and invoices
- Syft or Fathom: For year-end management reports
🔹 Common Mistakes Contractors Make
- Not accounting for WIP or unbilled projects
- Missing retentions or declaring them at the wrong time
- Failing to update director’s loan accounts
- Filing late = penalties + loss of credit rating
🔹 FAQs
Do I need an accountant for year-end accounts? Yes—especially in construction. Specialist knowledge is needed to handle CIS, VAT, job costing, and capital allowances. Can I delay year-end filing if I’m busy on site? You can’t extend deadlines. However, your accountant can handle it remotely if you keep your bookkeeping updated. What happens if I don’t file on time?- Late filing = penalties starting at ÂŁ150
- Late Corporation Tax = interest charges
- Repeated late filings = HMRC scrutiny