Skip to main content 4 accounting questions you might be asking this leap year
2024 is a leap year, which means that 29th February is making a rare appearance in our calendars. In some traditions, a leap year is considered bad luck, but it doesn’t have to be bad luck for your accounts if you plan for it.
So, without further ado, here are a few simple answers to the questions you might be asking as you prepare your books this February.
1. If my company’s year end is February, what date should I prepare its accounts to?
Thankfully, HMRC counts a year as 12 months rather than 365 days, so you don’t have to do anything special to account for the extra day in a leap year. If your company’s year end is normally 28th February, you should simply prepare accounts to the last day of the month, whether that’s the 28th or 29th.
| Year | Date to prepare accounts to if your company’s year end is in February |
|---|---|
| 2024 | 29th Feb |
| 2025 | 28th Feb |
| 2026 | 28th Feb |
| 2027 | 28th Feb |
| 2028 | 29th Feb |
2. Should I avoid invoicing on leap year day?
You might be reluctant to raise an invoice or enter costs on 29th February in case something goes wrong when it comes to filing your tax return, but don’t worry. Because HMRC counts a year as 12 months rather than 365 days, there’s no reason why you shouldn’t send an invoice or do any other accounting tasks on 29th February.
3. Is it better to be employed or self-employed on 29th February?
While you might think that a leap year could potentially raise more complications if you’re self-employed, you could actually be better off! Employees who are on an annual salary don’t get paid for this extra day but if you’re self-employed you can charge your rates as normal for an extra day of the year.
4. Can my accounting system handle the leap year?
If you’re using a spreadsheet or basic bookkeeping system to manage your accounts, you’ll need to make sure that it recognises the extra day. If it doesn’t, you could well run into trouble. Complications arise if you have any employees working the 29th on an hourly rate, or have to run payroll for an employee born 29th February.
To keep your leap year free of extra stresses, use a reliable and robust accounting software system that you can trust to recognise the extra day and account for it.
Make accounting for a leap year automatic
If you’re worrying about getting your accounts in order for a leap year, why not try a piece of software that does most of the hard work for you? FreeAgent works away in the background to calculate your tax bill, remind you of deadlines and much more. There’s a reason 9 out of 10 businesses feel more confident about their finances using FreeAgent (Small Business Monitor survey, Autumn 2023).
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Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this blog post. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.
