UK vs US Accounting: Key Differences

UK and US accounting differ in the rulebooks (FRS 102 and UK-adopted IFRS in the UK, US GAAP in the US), the tax year, the annual filings and the indirect tax. These are the differences owners most often need to know about.

By Jake McKenna, FounderPublished Last reviewed

Which accounting rules does each country use?

In the UK, FRS 102 applies to the financial statements of entities that are not applying adopted IFRS, FRS 101 or FRS 105, according to the Financial Reporting Council. UK-registered listed companies use UK-adopted international accounting standards for their consolidated financial statements, according to the UK government.

In the US, the SEC recognizes the FASB as the designated accounting standard setter, and the standards the FASB sets are recognized as generally accepted. That body of rules is US GAAP.

So a UK company and a US company may follow different rulebooks. The detail depends on the type of entity and whether it is listed. Ask your accountant which framework applies to you.

When does the tax year start?

Item UK personal tax year US tax year
Common tax year 6 April to 5 April (personal Income Tax) Calendar year (January to December)
Other options Not covered here A fiscal year of 12 months ending on the last day of any month except December 31

GOV.UK describes the current UK Income Tax year, the personal tax year, as running from 6 April 2026 to 5 April 2027. For a UK company, GOV.UK says the accounting period for Corporation Tax is the time covered by its Company Tax Return, normally the same 12 months as the financial year in its annual accounts. So the 6 April to 5 April dates are the personal tax year and do not define a company's year. The IRS says every taxpayer must figure taxable income for an annual accounting period called a tax year, that the calendar year is the most common, and that other tax years include a fiscal year. Rules apply to who may use a fiscal year, so check with your CPA before assuming you can pick one.

What has to be filed each year?

A UK company must file annual accounts with Companies House, even if it is dormant or not trading, and must file at least one confirmation statement every 12 months. See Ltd vs LLC for how US structures compare.

How do VAT and sales tax differ?

UK VAT is charged by VAT-registered businesses on their sales, and they can reclaim VAT on business purchases. US sales tax is imposed by states and local governments and collected from the buyer by the seller. Our guide to VAT vs sales tax has the full comparison with sources.

What does not depend on the country?

The routine bookkeeping tasks do not depend on the rulebook: bank accounts are reconciled, transactions are categorized, the month is closed and management reports are built on top. You can see how that works in our month-end close guide. The choice between cash and accrual accounting also exists in both countries; see cash vs accrual accounting.

Who can help with both?

Our founder, Jake McKenna, is British and now works with US businesses from Lehi, Utah. English Oak Financial offers bookkeeping, a fractional controller and fractional CFO services. We do not prepare tax returns, perform audits or give investment advice, and we work alongside your CPA. If your question is about which standard or tax rule applies to you, ask a qualified accountant or tax professional in the relevant country.

Need this done for you? See our Bookkeeping service, or pricing. English Oak Financial does not prepare tax returns, perform audits or give investment advice. This guide is general information, not tax, legal or investment advice.

Sources

Common questions

Do the UK and US use the same accounting standards?

Not exactly. UK entities not applying adopted IFRS, FRS 101 or FRS 105 apply FRS 102, and UK-registered listed companies use UK-adopted international standards for consolidated statements. US reporting follows US GAAP, set by the FASB.

Is the UK tax year the same as the US tax year?

No. The UK personal tax year, used for Income Tax, runs from 6 April to 5 April. A UK limited company has its own financial year and accounting period. The calendar year is the most common US tax year, though a fiscal year is another option for some taxpayers.

Is VAT the same as US sales tax?

No. VAT is charged by each VAT-registered business and reclaimable on business purchases. US sales tax is imposed by states and local governments and collected from the buyer at the retail sale. See VAT vs sales tax.

Can English Oak Financial prepare my UK or US tax return?

No. We do not prepare tax returns. We keep your books accurate and work alongside your tax professional.

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