Consider the role of a manufacturing CFO importing raw materials.

Using budget forecasting, you run scenario modelling to understand potential cost pressures:

• No tariff or duty changes (baseline scenario)
• A 10% increase in material costs
• A worst-case 20% increase, combined with extended lead times due to customs or border delays

With this analysis in place, you can evaluate potential responses, such as:

• Switching to a UK-based or alternative supplier
• Adjusting pricing strategies
• Delaying or phasing a product launch

That’s the power of a good budget forecast—it helps you deal with unpredictability, build agility into your strategy, and act confidently when the market shifts.

When forecasting is baked into your planning cycle, big changes don’t catch you off guard—they become manageable risks, not surprises.

Here’s what this article will cover:

What is budget forecasting?

Budget forecasting is the practice of predicting future financial outcomes by analysing historical data, current market trends, and your strategic business objectives.

It can help you anticipate revenues, expenses, and cash flow, so you can make better decisions and manage resources better.

How do you carry out budget forecasting?

Traditionally, you would do your budget forecast manually, using spreadsheets and historical financial reports, backed up with significant guesswork or intuitive judgement.

Your finance team might gather data periodically, often annually, using limited forecasting techniques, which forces you to forecast reactively rather than proactively.

Today, with budget forecasting, you can use advanced analytics, real-time data integration, and sophisticated financial modelling software for real-time data gathering.

Modern tools can automate much of the data collection and analysis so that you can make continuous updates and refinements to your strategy.

This proactive, data-driven approach can improve accuracy and help reduce uncertainty, enabling you to respond swiftly to market conditions or changes in internal dynamics.

Budgeting versus forecasting—what’s the difference?

People often confuse budgeting and forecasting. Whilst closely related, they serve distinct but complementary roles in financial planning. This chart outlines the subtle differences.

Aspect	Budgeting	Forecasting
Purpose	Set specific financial goals and allocate resources across departments or projects.	Estimate future financial outcomes based on actual performance, market trends, and updated assumptions.
Time frame	Usually fixed for a defined period, typically a financial year.	Ongoing, frequently updated.
Flexibility	Typically remains unchanged once approved.	Easily adjusted to respond to internal performance or external conditions.
Role in decision-making	Serves as a roadmap for business operations.	Helps businesses proactively adapt to changes.

Top tip

Think of a budget as your financial destination—a plan detailing where you intend to go—and forecasts as your satnav, continuously updating your route based on real-time information and changes along the way.

Aspect	Budgeting	Forecasting
Preparation Time	Typically takes weeks or months due to the extensive detail and collaboration required.	Generally quicker. Uses the latest financial results, economic indicators, and market trends.
Frequency	Usually created annually. Serves as a yearly baseline reference.	Updated frequently—monthly or quarterly—to align with your current business realities.

Forecasting thus plays a critical role in budgeting by continuously evaluating how well your business tracks against its budgeted goals and informing of necessary adjustments.

Why is budget forecasting important in financial planning?

Accurate budget forecasting can help you:

• Identify potential cash shortfalls or surpluses

You can proactively spot periods when your cash reserves might be low, such as before a significant investment in tech upgrades or during seasonal downturns. You can adjust funding or financing strategies accordingly.

• Support data-driven decision-making:

For example, if forecasted revenues fall short of budget targets, you can swiftly implement cost controls, delay discretionary spending, or adjust recruitment plans to maintain profitability.

• Improve stakeholder confidence:

Investors, board members, and executives rely on CFOs and finance teams for credible financial projections.

Robust forecasting helps build trust and transparency by setting realistic financial expectations, avoiding any surprises during financial briefings.

• Lifting agility in response to market or operational changes:

When external events, like rising interest rates or unexpected disruptions in supply chains (tariffs, etc), occur, you can arm yourself with accurate forecasting data to quickly revise financial plans. Your business can remain resilient and competitive.

With effective budget forecasting, you maintain control, credibility, and agility, ultimately strengthening your organisation’s financial health.

Key aspects of budget forecasting

• Incorporating market trends and external factors: economic indicators, industry changes, and market conditions all impact forecasts.
• Combining past and present data: historical performance is analysed alongside current operations.
• Short-term and long-term scope: short-term forecasts focus on immediate needs (3 –12 months), whilst long-term forecasts address broader strategy (1+ years).

Budget forecast examples

Type of budget forecast	Purpose	Example
Incremental budgeting	Adjust your budget based on expected financial changes or inflation.	Last year’s IT budget was £500,000. With planned infrastructure improvements and a projected 4% inflation rate, the new forecasted budget becomes £520,000 , helping you maintain efficiency without overspending.
Sales budgeting	Project future sales using historical data, market analysis, and growth goals.	Average quarterly sales are £1 million. With expected 15% growth from a new product launch, the next quarter’s forecast is £1.15 million , which will inform your recruitment and inventory decisions.
Business budgeting	Forecast operating expenses, revenues, profits, and cash flow across the business.	An annual forecast projects £10 million in revenue and £8 million in expenses , resulting in a £2 million profit , which supports planning, dividends, and investments.
Production budgeting	Forecast the resources needed to meet product demand.	With a sales forecast of 100,000 units, production is forecast at 110,000 units (including safety stock) to cover supply chain risks, guiding raw material and staffing budgets.

Benefits of accurate budget forecasts

Accurate budget forecasting offers big advantages that can directly contribute to your business success:

• Increased financial transparency and control

You can maintain tighter financial control and proactively fix issues before they become major challenges with clear visibility into your expected revenues, costs, and cash flows.

• Better resource allocation and prioritisation

With accurate forecasts, you can allocate resources strategically. If you shift funds and efforts towards the most impactful projects and activities, you’ll maximise performance.

• Improved investor and stakeholder confidence

Accurate and realistic forecasts show that your financial management can be trusted, reassuring investors, banks, and stakeholders that your business is well-managed and financially stable.

With your reputation boosted, you can use these smoother relationships for benefits such as easier access to capital.

• Enhanced agility and responsiveness

Accurate forecasting can provide real-time insights that can help you pivot your business in response to external changes, market disruptions, or internal challenges, transforming an unpredictable future into manageable risks and competitive opportunities.

• Strategic decision-making

Reliable forecasts form the basis of your informed, strategic decisions. You have actionable insights into future scenarios, meaning you’ve evaluated options methodically and confidently.

Budget forecasting methods and the role of tech

Modern technology can boost traditional forecasting methods:

Method	Description	Ideal environment	Technology benefits
Extrapolation	Extends past financial trends into the future.	Stable environments with predictable patterns	Automates trend analysis. Quickly identifies historical patterns. Efficiently projects them forward.
Regression/Econometrics	Uses statistical analysis to identify relationships between variables (e.g., revenue and market size).	Complex or volatile environments	Integrates large data sets. Uncovers subtle relationships. Precise predictive capabilities with advanced analytics software.
Hybrid forecasting	Combines data-driven insights with human expertise.	Uncertain or changing environments	Synthesises quantitative data with qualitative inputs. Collaborative platforms can blend human judgement with analytics for superior accuracy.

Key components of effective budget forecasting

• Market and external analysis: Incorporate economic indicators, industry shifts, competitor behaviour, and regulatory changes.
• Integration of historical and current data: Analyse past performance alongside real-time data to predict future outcomes accurately.
• Short-term vs. long-term forecasts: Short-term forecasts (3–12 months) address immediate operational needs, whilst long-term forecasts (1+ years) support strategic planning.

Budget forecasting step-by-step (and how software can help)

1. Define your forecasting assumptions

Begin by outlining the foundational elements of your forecast. These include:

• The time horizon (monthly, quarterly, or annually)
• Key objectives and business goals
• Major revenue streams and cost centres
• Policies that may influence planning (e.g., procurement rules or recruitment freezes)

Use advanced financial software to centralise assumptions in one place, apply them across models, and ensure consistency across departments.

2. Gather and connect your financial data

Pull historical financial data, internal performance metrics, and relevant external market inputs. This step is often time-consuming if done manually (consolidating spreadsheets).

The right financial software can automate data imports from accounting systems, CRM, and ERP tools, reducing errors and saving hours of time.

3. Conduct a preliminary analysis

Review your data to identify trends, seasonal patterns, and anomalies. Understand the drivers behind revenue changes or cost fluctuations.

Built-in dashboards and analytics in financial software could surface insights automatically, flagging variances and visualising performance trends.

4. Choose the proper forecasting method

Depending on your business model and level of uncertainty, select an approach such as:

• Extrapolation for steady growth
• Regression or econometrics for more complex relationships
• Hybrid models that mix human judgement with machine learning

Use financial management software that offers flexible modelling options to test multiple scenarios quickly, compare outcomes, and refine assumptions on the fly.

5. Review, adjust, and iterate

Forecasting isn’t a one-off task — it’s a continuous loop. Update your model as new data becomes available or when assumptions change. Revisit your projections monthly or quarterly to ensure alignment with reality.

With live data and built-in collaboration tools, financial software allows you to update forecasts in real time, loop in stakeholders, and track the impact of changes immediately.

Top tip: Collaborate across the business

The best forecasts bring input from across departments — sales, HR, operations, and marketing. 

Use technology that makes it easy to share models, leave comments, and align assumptions — reducing silos and improving forecast accuracy.

Using AI for ongoing analysis and improvement

Forecasting is about predicting and learning from the future.

With leaner teams and limited time, automation and AI could streamline and improve your forecasts.

Automate variance analysis to focus on strategic decisions

Modern financial management platforms can automatically compare actuals to forecasts and highlight significant variances across revenue, cost, and cash flow lines.

This can save your team from manual spreadsheet work and lets you spend time where it matters: understanding the why.

Drill into the variances that signal changing business conditions—and share those insights with other departments to course-correct in real time.

Use AI to improve forecasting accuracy

AI-powered budgeting and forecasting tools can surface trends that are easy to miss, such as seasonality shifts, pricing pressure, or evolving customer behaviour.

These tools learn from your historical data and help refine assumptions with each cycle, helping you move from reactive forecasting to predictive finance.

The result? More confidence in your numbers and better alignment with business priorities.

Create agile feedback loops with your team

Don’t wait until the year-end to reflect.

Set up lightweight feedback loops after each forecasting cycle—monthly or quarterly—to capture what worked, what didn’t, and what needs to be adjusted.

Document your learnings in shared systems or collaboration tools so your institutional knowledge builds over time, even as your team scales or changes.

Why it matters

In high-growth environments, agility is everything.

Use technology to continuously refine your forecasting process and become a trusted adviser —not just for what’s happening now but also for what’s coming next.

Smarter forecasting isn’t just about precision—it’s about supporting faster, better decisions.

How to create a good budget forecast presentation

Your budget forecast presentation is a strategic communication tool.

It sets the tone for growth planning, resource allocation, and risk management. An excellent presentation tells a story that builds confidence and inspires action.

Here’s how to get it right:

1. Clear messaging

Start with a concise executive summary. What are the key takeaways? Is the business on track, ahead, or at risk? Focus on the “so what” — what the data means for decision-making.

Set the strategic tone—frame forecasts around goals like market expansion, cost containment, or capital efficiency.

2. Consistent assumptions

Every strong forecast hinges on a clear set of assumptions: think about pricing changes, recruitment plans, cost inputs, and market dynamics. Spell these out up front and call out where you’ve deviated from previous models.

Inconsistencies in assumptions can erode trust. Own these assumptions and show how they were stress-tested to build credibility.

3. Transparency in methodology

Stakeholders want to know how you arrived at your numbers. Were you using extrapolation? Regression models? Scenario analysis?

Tech can make showing calculation logic, audit trails, and model inputs interactively and transparently easier.

4. Impact analysis

Explain the implications of your projections. What do forecasted changes mean for:

• Cash flow and reserves
• Recruitment plans and headcount
• Capex or operational investment
• Debt covenants or liquidity ratios

Bring value by linking financial projections with operational impact and your broader business strategy.

5. Engage stakeholders early and often

Forecasts shouldn’t live in the finance silo. Involve functional leaders (sales, operations, HR, etc.) early. This will create support and increase buy-in.

Look for modern financial platforms that can support real-time collaboration and commentary, so the key players can contribute, challenge, and align before a boardroom presentation.

6. Present scenarios, not certainties

Embrace ambiguity. Instead of one static forecast, show multiple scenarios: best case, base case, and worst case. Then, discuss what actions your business would take for each.

Show board members and executives that you’re planning for what will happen and what could happen. Make it clear you’re ready to act with agility.

The bottom line: A strong forecast presentation is your moment to lead from the front, showing that finance can track performance and drive the future. With the right tools, messaging, and insights, you turn numbers into strategy and action.

Be clear that manual forecasting processes can be time-consuming and error-prone. A financial planning and modelling tool can simplify the process, help automate data collection and analysis, and assist with forecast accuracy.

Final thoughts

Make financial uncertainty your competitive edge.

Budget forecasting is about gaining clarity in chaos, building agility into your strategy, and turning potential risks into informed decisions.

With the right mix of human insight, smart tools, and real-time data, your forecast becomes your advantage.

Don’t simply react. Forecast, adapt, and lead.

One of the biggest business challenges in today’s fast-paced world is maintaining real-time connection and integration between teams.

Enterprise Resource Planning provides a foundation for business operations and growth strategies and should be a key focus for any business, especially SMEs.

The ERP software market is projected to reach a staggering $117.09 billion by 2030, in response to increasing demand across virtually all sectors such as manufacturing, construction, utilities, retail, healthcare, IT and telecoms, financial services and insurance.

In this article, we cover the main characteristics and benefits of ERP systems.

We also explain the different types of ERP deployment so you can decide which approach will be the best for your business.

After reading this article you’ll have a good understanding of what ERP is and if it’s right for your business.

Here’s what we’ll cover:

What is ERP?

Enterprise Resource Planning, or ERP, is a process that a business can use to manage, integrate and automate the core parts of its day-to-day operations.

An ERP system is software that integrates the management of day-to-day business operations.

It’s typically made up of a central, unified database that allows information to be shared across departments such as finance, human resources, customer relations, inventory purchasing, product management, manufacturing, and sales.

This ensures that every team is working with the same data, to maintain accuracy and consistency.

On top of this, what makes ERP systems invaluable to SMEs is their ability to increase efficiency and productivity across these different teams.

This could be through the integration of various business processes, or through the automation of daily/repeatable tasks, or it could be providing real-time data insights to enable senior leadership teams to make quicker, more informed decisions.

How did ERP evolve?

The term ERP first appeared in the 1990s, although the first electronic systems for planning resources—the forerunner of the technology we use today—emerged several decades earlier.

Initially, ERP began life as a process known as Material Requirements Planning (MRP) in the 1960s and 70s.

At the time, these systems were designed specifically to automate inventory and production planning in the manufacturing sector.

This included tasks such as calculating material requirements based on production schedules and bills of materials (BOMs).

Fast forward to the 1980s and MRP systems evolved into MRP II, which included additional functions such as finance, HR, and distribution.

By integrating these new functions, MRP II provided workers with a much more holistic view of their daily tasks, dependencies and deadlines.

By the 1990s, the technology had evolved again, into what we now recognise as ERP. At this point, they had the power to streamline and automate a far wider range of processes than ever before.

Systems started to provide a consolidated database with data flowing seamlessly across departments. This improved collaboration and ultimately, productivity.

By the late 1990s, ERP systems transitioned online, further improving collaboration between teams.

ERP systems inevitably moved towards the cloud in the mid-2000s, which brought with it further benefits such as lower infrastructure costs and scalability.

As technology progressed, ERP systems also embraced mobile technology, followed by AI and machine learning to further automate tasks and provide deeper insights through powerful analytics, giving us the ‘intelligent ERP’ we know and rely on today.

What are the key features of ERP systems?

Whilst the specific features can vary from one ERP system to the next, the main characteristics include:

Seamless integration

ERP systems store huge volumes of data in a single, unified database, ensuring de-duplication and consistency across all departments.

They also streamline processes that span multiple departments, such as order-to-cash, procure-to-pay, and production planning.

Automation as standard

ERP systems optimise workflows by automating routine tasks, reducing the manual effort required, but also minimising the chance of errors.

This improves efficiency and frees up your teams to focus on higher-value activities.

Real-time data for real-time decision-making

ERP systems provide up-to-the-minute visibility of key business metrics, enabling managers and other stakeholders to make more informed decisions based on live information.

Scalability and flexibility

An ERP system can be scaled up or down to accommodate any changes that might occur in your business, such as a sudden spike in growth, and can easily be configured to support your business processes as they evolve over time.

Reporting and analytics

An ERP system can be used to generate comprehensive reports and analytics in a few clicks, which provide invaluable performance insights that you can use to justify budgets, identify trends, optimise processes, and drive continuous improvement for the company.

What functions does ERP optimise?

As we mentioned above, ERP systems are invaluable to any business.

Not only are they built around a robust and unified data asset, but they are also flexible in that they can sit across a number of different teams and processes and be reconfigured as those teams evolve.

Companies with ERP	Companies without ERP
Integration & data management – Centralised data from various departments – Improved data accuracy and consistency – Real-time data processing and reporting	Integration & data management – Data silos with isolated information – Higher risk of data inconsistencies and errors – Delayed reporting due to manual data compilation
Operational efficiency – Automation of routine tasks – Streamlined workflows – Scalable processes	Operational efficiency – Reliance on manual processes – Fragmented workflows – Limited scalability
Decision-making & reporting – Comprehensive reporting tools – Informed, real-time decision-making – Better compliance and risk management	Decision-making & reporting – Limited reporting capabilities – Slower and less accurate decision-making – Greater difficulty in maintaining compliance
Customer service & satisfaction– Faster and more accurate order processing – Better customer data management – More responsive supply chain management	Customer service & satisfaction – Slower response times and potential errors – Disjointed customer data – Supply chain inefficiencies

What are the main types of ERP modules?

Given the multitude of ERP use cases, there are many ways to categorise the various modules of an ERP system.

Each ERP module interconnects within an ERP system to provide a 360-degree view of operations, which fosters transparency and efficiency across each function as follows:

Financial management

Automates financial operations, such as budget and cash flow management and provides your teams with real-time insight into the financial status of the company to help them “make more informed decisions and optimise financial activities”.

CRM

A built-in CRM functionality helps you manage your customer data easily in one place.

This, in turn, will help you deliver far more personalised and engaging customer experiences and, ultimately, drive sales.

Sales

Streamlines the entire sales process by automating tasks including order scheduling, processing and shipping, ensuring efficiency across all sales operations.

Business intelligence

Analyse large data sets and translate them into actionable insight, giving team leaders the confidence they need to make pivotal decisions.

Human resources

Covers all aspects of your employee relations and workflows, from recruitment to retirement.

An ERP system can automate processes such as payroll, employee performance tracking, and the management of personnel data, helping HR manage the company’s workforce more effectively.

Purchasing

Automates end-to-end procurement and logistics processes to maximise cost savings wherever possible—invaluable when you need to negotiate more favourable terms with suppliers.

Manufacturing

Helps you plan and optimise manufacturing processes and material resources so you can stay on top of product lifecycle management, all the way from design right through to production to maintenance.

Distribution

Warehouse processes and movements, so you can respond quickly to changes in supply and demand, optimise logistics, and make sure your products are delivered on time.

Supply chain management

Streamlines logistics and reduces lead times through improved demand forecasting and inventory management.

This means you get access to more accurate and timely information, so you can continually optimise inventory levels and reduce costs.

Project management

This is a core function of an ERP system, as it sits across multiple teams and processes, and can aid project management in many ways.

For example, it can provide tools such as resource allocation, time scheduling, and risk management to help you plan, execute, and monitor project tasks more efficiently.

Marketing automation

Automates a whole host of marketing processes such as building out personalised nurture campaigns, creating relevant social media content, or measuring the impact of marketing campaigns across different channels.

Ecommerce

Helps SMEs build and launch a fully operational B2B or B2C website, complete with integrated payment, order and inventory information feeds, so you can start selling products or services online.

Advantages and disadvantages of ERP

As with any software, there are pros and cons for the teams who use it, and for the wider organisation.

In a 2024 survey, respondents using ERP across a range of sectors reported the key advantages of ERP software as:

• Improved customer experience: 95.1%
• Standardisation: 90.7%
• IT maintenance costs: 90.5%
• Productivity and efficiency: 90.4%
• Interactions with suppliers: 87.5%
• Real-time data: 86.6%
• Compliance: 83.6%
• Removing silos: 80.0%

Naturally, without having all the right tools and support in place, ERP can also present disadvantages:

Complexity and resource intensity

Implementing ERP can be challenging, time-consuming, and expensive, placing significant stress on corporate time and resources.

What’s more, ERP implementation projects can end up requiring substantial investment and effort from both a business and engineering perspective, which in turn can pose challenges in terms of deployment and management.

User adoption and training challenges

Whilst it’s natural for users of the platform to show some level of resistance, especially during the testing phase, this can severely impact adoption and can hinder the successful implementation of the system.

Beyond initial rollout, effective training transfer plays a crucial role in ensuring the ERP system is used correctly and consistently across the business. Adoption is strongly influenced by a combination of user mindset, confidence, and motivation, including:

• Mastery goal orientation (striving to master the task according to the standards the user has set for themself).
• Computer self-efficacy (the user’s own judgement of their capability to use a computer).
• Transfer motivation (how willing the user is to apply the learnings from their ERP training in their day-to-day work).

Concerns about planning and customisation

The selection and implementation of ERP systems require careful consideration and planning, not least because of challenges such as issues with taxonomy or complexities when it comes to implementing a cloud ERP system, but also because of the level of customisation you might need to meet the specific needs of an individual organisation.

Lack of real-time ERP data

The challenges and complexities of system integration can also create issues with data access and visibility. As organisations implement ERP, it’s common for data to become fragmented across systems, making it harder for teams to find, trust, and use information effectively.

Without reliable data flows and automation, businesses often face delays, inconsistencies, and manual workarounds. Employees, in turn, may struggle to access the information they need, reducing collaboration and slowing decision making across the organisation.

Is ERP right for my business?

Before investing in any ERP solution, it’s important to:

• Break down your business needs. Has your SME grown so quickly that you need more integrated systems, streamlined processes, and data visibility? Could your business benefit from a centralised system that connects various departments and functions?
• Familiarise yourself with the capabilities of ERP systems, such as how they can be used to automate different processes or manage your data. Do these features align with your business objectives, and can they address your operational challenges?
• Consider the scalability of different ERP systems. Will they accommodate your business growth and expansion, as well as support future development?
• Calculate the total costs, including software licensing, customisation, training, and maintenance. Does the investment align with your budget and expected ROI?
• Consider how well it integrates with your existing software applications and systems used in your organisation. Can the ERP solution seamlessly integrate with your accounting software to ensure consistent financial data, streamlined workflows, and accurate reporting? A well-integrated setup allows for automatic syncing of transactions, real-time visibility into financials, and reduces the need for manual reconciliation between systems.
• Evaluate the user-friendliness of the ERP system interface and its functionalities. Is it intuitive and easy for teams to adopt, with minimal training?
• Research the reputation and track record of ERP vendors in the market. Are they stable? Do they have good customer reviews?
• Look at the customisation options available to tailor the solution to your specific processes and requirements. Can it be configured to align with your workflows?
• What data security measures are in place to protect sensitive business information? Does it comply with data protection regulations?
• Consider the level of support and training provided during and after implementation. Do they offer comprehensive training programmes and ongoing support to assist your team?
• Evaluate the reporting and analytics capabilities to generate insights and drive informed decision-making. Does it provide you with real-time data visibility and tools for customisable reporting?
• Look for case studies of businesses that have implemented ERP systems. How have they benefited organisations in your industry?

How to roll out ERP in your organisation

Fundamentally, there are four distinct strategies you can choose to roll out deployment in your company.

Depending on the specific needs, size, and capabilities of your SME, as well as the complexity of the ERP you’re implementing, and of course the timeframe and budget you have available.

1. ‘Big Bang’ approach

This approach involves transitioning from a legacy system to a new system in a single switchover, with all of your team moving to the new system on a set date.

It requires extensive planning, training, and resources to ensure a smooth and successful transition to the new system.

The pros? It is typically quicker and less expensive than other methods because it involves a single, major effort rather than a series of smaller, prolonged efforts.

However, the risk is potentially higher, because it can cause significant disruptions if you encounter any problems during the transition.

To mitigate this risk, you need to be set up to handle such a sudden change and be capable of fixing issues swiftly as they arise.

2. ‘Phased Rollout’ approach

The phased approach involves implementing the new system in stages, with each stage focusing on different modules, or business functions, or locations, transitioning them from the legacy to the new system gradually.

The pros? There is less risk because any issues can be identified and resolved in one phase before you move on to the next. It also allows everyone to adapt to the new system over time.

However, it can be more costly and time-consuming, because you need to manage multiple transitions and maintain support for both the new and old systems during the implementation period.

3. ‘Parallel Adoption’ approach

This involves running both the legacy and new systems simultaneously for a certain period, which gives everyone a chance to get accustomed to a new way of working whilst still having the legacy system as a backup in case they encounter any issues.

The pros? It offers a safety net because you can continue to operate the legacy system if significant issues arise that prevent your teams using the new ERP system properly.

Also, you can easily compare the performance of the new ERP system with the legacy system, mitigating risks associated with a sudden switch.

However, operating two systems at once can be a drain on your resources.

What’s more, it can be confusing, and therefore inefficient, to use two systems at the same time for a prolonged period.

4. ‘Pilot Implementation’ approach

A pilot implementation tests the ERP system with a smaller subset (i.e. department or location) of your organisation using it extensively before a full rollout takes place.

The pros? Similar to phased rollout, this allows you to identify any potential challenges, gather everyone’s feedback, and make necessary adjustments before you sign off on a full-scale implementation.

However, if the pilot doesn’t fully represent your business’ wider needs, issues that are specific to other areas might not be identified until later phases.

The future of ERP

Integration with advanced technologies

Right now, AI is rolling out into our lives and workplaces faster than we can keep up and smart technologies are already being adopted into ERP systems.

In the future, however, we’ll see even more advanced integrations using AI, Internet of Things (IoT) and blockchain to further enhance their capabilities.

In fact, this new era of generative AI will enable ERP systems to provide more intelligent insights and automation in business processes.

For example, by analysing historical data to forecast future trends and behaviours, SMEs will find particularly useful in areas such as inventory management or strategic planning.

Cloud-based ERP solutions

The adoption of cloud-based ERP systems is on the rise, allowing SMEs in particular to leverage the scalability, flexibility, and cost-effectiveness of cloud computing.

This shift will continue to grow, enabling better and quicker access to data and applications—anytime, and from anywhere.

Sustainable software

As we become more aware of the need to implement low-emission or carbon-offsetting technologies and processes, there is a growing emphasis on Sustainable Enterprise Resource Planning (S-ERP) systems to manage more sustainable business practices.

What’s more, future ERP systems are likely to incorporate more features that support environmental sustainability and green initiatives.

Meeting the needs of SMEs

As the demand for ERP soars, novel frameworks for choosing and implementing the right ERP systems are emerging to inform best practices and—for the first time—create industry standards for ERP.

These frameworks are agile to meet the needs of SMEs (or indeed global organisations), based on their sector, size, and individual objectives.

In particular, we’re seeing a growing focus on ERP implementation in SMEs, to help them overcome the challenges of today and seize the opportunities of tomorrow.

Future ERP systems will offer even more tailored solutions and frameworks designed for small, medDium and large enterprises, marking a new dawn of scalable, customisable, smart business solutions for all.

In a world where technology is driving efficiencies across all pockets of the organisation – from sales and marketing to finance and HR and everything in between – it’s important to embrace the right tools for the best outcomes. To find out more about how cloud solutions can help transform your business, visit Sage Intacct.

Or for more information on how to choose the right ERP software for your teams’ individual needs, visit Sage X3.

ERP Explained FAQs

Discover the essentials of financial forecasting and learn to create effective projections that drive business success. Gain expert insights to guide your strategy.

When key exports from the UK to the USA were subject to American tariffs, many businesses were caught off guard. Costs surged, supply chains buckled, and margins narrowed.

Yet some businesses modelled worst-case scenarios into their financial forecasts, allowing them to respond swiftly.

They anticipated rising costs and supply chain disruptions—positioning themselves to adapt quickly and protect their bottom line.

Whether you’re a CFO aiming to safeguard profitability or a business owner navigating uncertain, complex conditions, robust financial forecasting could empower your decision-making and resilience.

Picture the scene. Your business is entering a major growth phase.

You’ve bold plans: expanding into new markets, hiring top talent, investing in innovation…

• But, can your cash flow sustain this growth trajectory?
• How will changing revenue patterns or rising costs impact your profitability next quarter—or next year?
• And if the unexpected hits again, will you be ready?

Financial forecasting can be a powerful tool for helping you move forward.

It helps you anticipate financial outcomes, plan for different futures, and make confident, data-backed decisions—even in uncertain times.

Here’s what this article will cover:

What is financial forecasting?

Financial forecasting is the process of estimating future financial outcomes based on historical data, current trends, and projected business activity.

Successful use of forecasts helps you make informed predictions to guide your budgeting, strategy, and investments.

• Whilst budgeting sets targets for revenue and expenses, forecasting projects what is likely to happen.
• Forecasts inform budgets and allow you to pivot when reality diverges from the plan.

Key benefits of financial forecasting

High-performance financial forecasting transforms uncertainty into strategic clarity. It can position you to manage challenges, help you seize opportunities proactively, and cultivate deep investor trust.

By evaluating future scenarios and financial outcomes, you can confidently lead, allocate resources wisely, and stay agile as market conditions shift.

Here’s how forecasting helps you drive success:

• Improve cash flow visibility— quickly identify shortfalls or surpluses and proactively manage liquidity.
• Stronger strategic planning— before committing resources, test the financial impact of new products, market expansion, or hiring plans.
• Greater investor confidence— demonstrate maturity and growth potential to investors with reliable forecasts.
• Early risk detection— identify challenges like downturns or cost spikes early, protecting margins with contingency plans.
• Make smarter decisions, backed by data— replace guesswork with insights to shape pricing, investment, and resource allocation.
• Get fewer surprises— prepare by modelling best-case, worst-case, and likely scenarios.

Forecasting helps you shift from reactive firefighting to proactive decision-making, needed for long-term growth and resilience.

Merge your financial vision with the day-to-day

Financial forecasting is a strategic discipline that helps you balance short-term agility with a long-term vision.

To do this effectively, you can focus on two distinct but complementary timeframes: short-term operational forecasting and long-term strategic forecasting.

But the time horizon isn’t the only factor you need to consider. Your approach—top-down versus bottom-up forecasting—will shape the quality and impact of your insights.

By integrating these dimensions, you can gain the clearest picture of where you’re headed, how to get there, and what to watch out for.

Top tip: Top-down forecasting starts with high-level targets (like revenue goals) and breaks them down into departmental plans. 

Bottom-up forecasting begins at the operational level, building forecasts based on individual team inputs or unit economics.

Short-term forecasting: Operational control in real-time

Time frame: daily, weekly, or up to three months

Focus: liquidity, cash flow, working capital, staffing, inventory

Approach: often built bottom-up using detailed internal data

Short-term operational forecasting can give you the financial visibility to manage your day-to-day operations confidently.

It answers practical questions like: can we make payroll this week? Do we need to reorder stock? Are we ready for an unexpected expense?

Let’s say you’re a retailer preparing for the Christmas season.

• A weekly operational forecast lets you predict sales peaks, inventory needs, staffing requirements, and cash outflows.
• With this foresight, you can take proactive steps—like hiring seasonal staff or boosting stock levels—before the seasonal crunch hits.

The key benefits of short-term forecasting:

• Precise cash flow management. Identify and resolve cash gaps before operational disruptions.
• Inventory control. Prevent stockouts or excess inventory through accurate demand forecasts.
• Real-time responsiveness. Quickly adjust to supply chain issues, price fluctuations, or sales changes.

Long-term forecasting: Strategic planning for growth

• Time frame: one to five years
• Focus: strategic growth, fundraising, expansion, product development
• Approach: often top-down, using market-level data, but enhanced by bottom-up feasibility

Long-term strategic forecasting zooms out.

• It supports high-stakes decisions like launching new products, entering new markets, or seeking investment.
• Whilst top-down assumptions help set ambitious growth targets, bottom-up data can ensure those plans are grounded in operational reality.

Let’s assume you plan to expand into a new market or develop a new product line.

• A multi-year forecast helps estimate revenue potential, capital needs, and profitability.
• These insights are essential for aligning stakeholders and making the case to boards or investors.

Key benefits:

• Informed strategic planning. Assess the financial viability of major strategic initiatives.
• Enhanced investor confidence. Secure better funding terms through credible forecasts.
• Proactive risk management. Identify future risks (e.g., regulatory shifts, interest rates) early for swift action.

Top-down vs. bottom-up forecasting: Marry vision with reality

You’ve got a choice between top-down and bottom-up forecasting. The smart move? Use both.

Top-down forecasting

Starts with market-level data and narrows down to your business’s potential.

• Best for: setting strategic targets and framing investor narratives
• Strength: ambitious, fast, ideal for early-stage or high-growth plans
• Watch out: you can overestimate without operational grounding

Example: “The market is worth £10B—we aim to capture 1% in 3 years.”

Bottom-up forecasting

Builds from internal data—sales, capacity, hiring—and scales upward.

• Best for budgeting, operational planning, and resource allocation
• Strength: realistic and execution-focused
• Watch out: you may overlook big-picture opportunities

Example: “With current staffing, we can ship 50 units per month.”

Why use both top-down and bottom-up forecasting?

• Top-down defines your strategic ambition.
• Bottom-up ensures feasibility.

When layered together, your high-level goals align with what your business can deliver, giving you credibility and clarity.

4 key types of financial forecasting

To build a clear, confident financial strategy, you need more than just one type of forecast.

Each financial forecasting type offers distinct insights, whether predicting revenue, managing cash flow, controlling expenses, or understanding your balance sheet.

Together, they give you a 360° view of your financial future—empowering better decisions, sharper resource planning, and proactive risk management.

1. Revenue forecasting

Predicts future income based on historical data, market conditions, pricing strategy, and customer behaviour.

Why it matters: Accurate revenue forecasts form the backbone of your financial planning. They help you track performance, shape growth strategies, and inform investor reporting.

Top tip: 

Factoring in subscription growth, customer retention, and average deal size lets you gauge whether you’re on track to hit quarterly sales targets—and where to adjust sales or marketing efforts.

2. Cash flow forecasting

Estimates when money will flow in and out, ensuring you maintain liquidity for day-to-day operations and strategic initiatives.

Why it matters: Strong cash flow visibility lets you avoid shortfalls, optimise working capital, and confidently plan financing.

Top tip: 

Spotting a problematic timing gap between inventory purchases and customer payments helps you act early—whether by securing a credit line or renegotiating payment terms.

3. Expense forecasting

Projects future costs, both fixed (like rent or salaries) and variable (like raw materials or commissions).

Why it matters: Expense forecasts help you control costs, protect margins, and ensure spending aligns with strategic goals.

Top tip: 

Planning an expansion? Forecasting upfront costs (like new leases and headcount) lets you model profitability and avoid nasty surprises down the line.

4. Balance sheet forecasting

Predicts your future financial position—assets, liabilities, and equity—based on strategic and operational plans.

Why it matters: A forward-looking balance sheet clearly shows financial health, informing debt decisions, capital structure, and investor confidence.

Top tip: 

Are you considering a significant investment? Forecasting its long-term impact on leverage ratios and equity can help justify the move to stakeholders or lenders.

Common financial forecasting methods

There’s no one-size-fits-all forecasting method.

The best approach depends on your data, business complexity, and goals. Here are six widely used techniques.

1. Straight-line forecasting

Project future performance using a steady growth rate based on historical trends.

• Best for: stable, mature businesses

Example : if revenue has grown 5% annually for three years, project the same rate in the future.

2. Moving average

Smooth short-term fluctuations by averaging past performance over a set time window (e.g., 3–6 months).

• Best for: businesses with seasonal variation
• Example: if you’re a retailer, you might use a 3-month moving average to plan inventory without being skewed by one-off spikes.

3. Regression analysis

Uses historical relationships between variables (e.g. marketing spend and sales) to forecast future performance.

• Best for: data-rich environments with multiple influencing factors
• Example: analyse how ad spending and economic indicators impact revenue to refine sales forecasts.

4. Time-series analysis

Identifies patterns like seasonality and long-term trends using historical data.

• Best for: SaaS or recurring revenue businesses
• Example: use time-series tools to anticipate end-of-quarter spikes and align staffing or cash flow accordingly.

5. Scenario planning

Models best-case, worst-case, and most likely outcomes to prepare for uncertainty.

• Best for: Strategic planning or market expansion

Example: UK companies hit by tariffs have seen their costs spike virtually overnight. Those with robust forecasting processes—including scenario modelling for policy risks—could have adapted quickly.

6. Machine learning / AI models

Advanced algorithms detect patterns and continuously adjust forecasts based on new data.

• Best for: fast-moving or complex businesses
• Example: use AI to update real-time forecasts based on traffic, conversions, and ad performance.

Tariff shock: A real-world lesson in forecasting resilience

In 2018, tariffs disrupted supply chains overnight. Companies that incorporated scenario planning into forecasts could quickly adjust supplier relationships, reprice products, and shift strategies—turning uncertainty into decisive action.

Top tip : scenario forecasting isn’t theoretical—it’s critical risk management for your bottom line.

Choose the right method

The forecasting method your finance team selects often depends on:

• Data availability: more detailed data allows advanced regression or machine learning techniques.
• Complexity and volatility of your business: more volatile businesses benefit from scenario planning and AI-driven models.
• Forecasting horizon: short-term operational forecasts often use moving averages or straight-line methods, whilst long-term strategic planning benefits from scenario analysis, regression, and time-series methods.

Combining methods can further strengthen your forecasting approach.

• You might use straight-line forecasting for stable expense items but use regression analysis or AI models for forecasting revenue in a complex market environment.
• By thoughtfully selecting and applying different methods, you can provide robust forecasts that inform strategic decisions, optimise resources, and enhance business resilience.

The limitations of manual financial forecasting

Due to familiarity and flexibility, you may still rely on spreadsheets for financial forecasting.

However, Excel-based forecasting has significant limitations, especially as your business scales or becomes more complex:

• Prone to errors: manual data entry and formula errors can easily lead to inaccuracies.

Limited scalability: as data volumes and complexity increase, Excel-based models become cumbersome, slow, and challenging to maintain.

• Lack of collaboration: version control issues and limited workflow management hinder collaboration across teams and departments.
• Reduced agility: Excel can’t easily support real-time scenario modelling or dynamic, driver-based forecasting at scale.

Why consider dedicated software for financial forecasting?

Modern forecasting should not be a spreadsheet-based guessing game.

If your business is growing in complexity, dedicated forecasting tools give you the agility, accuracy, and insight you need to lead with confidence.

Ultimately, dedicated budgeting and forecasting software shifts your finance function from reactive to strategic—freeing up time to focus on driving growth, not wrangling spreadsheets.

Here’s why your finance team might consider making the switch:

• Automation and scalability eliminates manual errors and easily scales forecasting as your business grows.
• ERP integration for real-time data integrates forecasting with accounting and ERP systems ensuring consistent, current data.
• Scenario planning on demand to rapidly model scenarios, preparing you for economic shifts or sudden growth.
• Cross-functional collaboration aligns finance, sales, operations, and HR through shared workflows and transparency.
• Visual dashboards and reporting simplifies complex data into clear, actionable insights for stakeholders.

CFO checklist: Build a reliable financial forecast

Whether building your first forecast or refining an existing process, following forecasting best practices ensures accuracy, transparency, and strategic value.

Use this checklist to guide your approach:

1. Define your forecasting objectives

• Be clear about what you’re trying to achieve—whether it’s managing short-term cash flow, planning long-term growth, securing investment, or supporting budgeting cycles.

2. Select the right forecasting method

• Choose a method suited to your data and business model—like straight-line, bottom-up, regression analysis, scenario planning, or AI-driven models.
• Align your approach with your business complexity, data availability, and decision-making needs.

3. Set your time horizon

• Decide between short-term (3–12 months) for operational planning or long-term (1–5 years) for strategic visioning.

4. Gather reliable historical data

• Collect and validate key financial inputs, such as revenue trends, expense patterns, and cash flow movements.  
• Historical accuracy is the foundation of credible forecasting.

5. Build your “base case” scenario

• Create a realistic forecast based on current trends and assumptions. 
• Document everything clearly so stakeholders understand the logic behind your numbers. 

6. Layer in scenario planning 

• Add best-case and worst-case projections around your base case to test resilience under different conditions.  
• Identify key business drivers that influence each scenario. 

7. Stress-test assumptions 

• Evaluate how changes in external factors—like market shifts, inflation, or interest rates—might impact your forecast.  
• This helps you plan for volatility and manage risk.

8. Collaborate across departments 

• Forecasting isn’t just a finance exercise. Engage sales, operations, HR, and marketing to validate assumptions and improve accuracy. 

9. Review and refine regularly

• Update forecasts monthly or quarterly to reflect actual performance and shifting market dynamics.  
• Keep forecasts dynamic, so they stay helpful and aligned with reality.

Common financial forecasting pitfalls 

Even experienced CFOs and finance teams can fall into forecasting traps. Recognizing the common pitfalls helps you build stronger, more reliable financial plans. 

1. Over-reliance on historical growth without market context 

Past performance isn’t always indicative of future results. Blindly projecting historical growth can be misleading, especially if market conditions have shifted. 

• Avoid by incorporating current market intelligence, competitive analysis, customer insights, and macroeconomic trends into your forecasts. 

2. Failing to update forecasts regularly 

A static forecast quickly becomes irrelevant. Infrequent updates prevent your business from responding effectively to changing conditions. 

• Avoid by establishing a regular forecasting cadence (monthly or quarterly) and consistently updating scenarios with your latest actual results and market data. 

3. Ignoring external factors (e.g., inflation, supply chain disruptions)

External risks such as inflation, economic downturns, supply chain issues, or regulatory changes can significantly impact your forecasts. 

• Avoid by routinely stress-testing your forecasts against external factors and building contingency scenarios for significant external risks. 

4. Lack of collaboration across departments

 Forecasts built in isolation (within finance) often miss critical operational insights from sales, marketing, HR, and operations teams. 

Avoid by encouraging cross-departmental communication and collaboration, ensuring alignment and buy-in from key business stakeholders. 

5. Using overly complex forecasting models 

Excessively complicated models can lead to confusion, mistakes, and reduced adoption—especially if few people in your organisation fully understand them. 

• Avoid by keeping models as simple as possible, clearly documenting assumptions, simplifying technical details, and providing regular stakeholder training.

Final thoughts

Sudden tariffs, economic shifts, market turmoil—these aren’t rare exceptions. They’re the new business reality.  

Accurate forecasting can win you strategic clarity, sustainable growth, and investor confidence. It transforms unforeseen challenges into navigable scenarios. 

High-performance financial forecasting can be your strongest defense against uncertainty. 

The start of a new tax year presents your practice with an opportunity to set the stage for success.

From embracing automation and optimising workflows to MTD for Income Tax’s start, there are a number of ways to position your practice for its most successful year yet.

In this article, we explore key steps and insights to help you lay a solid foundation for the 2026/27 tax year and empower your team to deliver exceptional service and drive growth.

Here’s what we cover:

New legislation changes for the 2026/27 tax year

There’s quite a few changes happening as the 2026/27 tax year gets underway, many of which will affect your practice, and your small business and self-employed clients.

Here’s a summary of the financial changes you need to be aware of that came into force in April 2026 (you can get a full update in our new tax year article):

• Making Tax Digital for Income Tax: It’s arrived for the first £50,000+ tranche. We surely don’t need to tell you any more than that. Our final countdown playbook is essential reading at this stage. But we also suggest you read our guides to managing the workload while keeping healthy:
• Statutory Sick Pay (SSP): There are three main changes. First, the three-day waiting period is gone. SSP is now payable from day one of sickness absence. Second, the Lower Earnings Limit—that was £125 per week—has been scrapped entirely for SSP eligibility. Third, for lower-paid employees, the new SSP rate will be whichever is lower: 80% of average weekly earnings or the flat rate of £123.25.
• Statutory parenting pay: The weekly cap for statutory maternity pay, paternity pay, shared parental pay, adoption pay, parental bereavement pay, and neonatal care pay rises from £187.18 to £194.32 from 6 April 2026.
• Small Employers Relief: From 6 April 2026, the rate of compensation will increase from 8.5% to 9%. Employers who qualify for Small Employers Relief will therefore be able to reclaim 109% from HMRC.
• Minimum wages: From 1 April 2026, the National Living Wage for those aged 21 and over rises from £12.21 to £12.71 per hour, a ~4.1% increase. The rate for 18–20-year-olds rises to £10.85 per hour, and the rate for 16–17-year-olds and eligible apprentices increases to £8.00 per hour.
• Employers’ National Insurance: No change from 2025: the rate increased from 13.8% to 15% on 6 April 2025, and the threshold that employers start paying National Insurance contributions (NICs) dropped from £9,100 to £5,000 per year.
• Business Asset Disposal Relief: The Capital Gains Tax rate on gains qualifying for Business Asset Disposal Relief (BADR) increases from 14% to 18% from 6 April 2026. The lifetime limit remains capped at £1 million.
• Business rates: From 1 April 2026, qualifying RHL properties with rateable values under £500,000 will benefit from permanently lower business rates multipliers, set 5p below the national rate. Pubs and live music venues get an additional 15% relief on top during 2026/27, with their bills then frozen in real terms for the following two years.

Refresh your processes for the new tax year

MTD is changing everything, of course, and we’ve examined this in several recent articles that aim to guide accounting professionals right up to the April deadline:

You can also filter by our MTD tag for accountants, and see all our coverage (of which there is a lot)

However, the broader picture is clear: now is the perfect time for you to review your practice processes and identify ways to make them more efficient, so you can provide more value to your clients.

From re-engaging your clients to highlighting the benefits of digital record-keeping, and upskilling your staff, there is plenty you can do to ensure you set your practice up for success.

Below, we cover these in more detail.

Review, reprice and re-engage your clients

Retaining clients is critical to a successful and stable practice, but you can’t rely on it happening automatically.

You need to establish a strategy.

It’s important to reconnect with your existing clients at the start of the new tax year for several reasons:

• Understanding your clients’ goals for the upcoming year will help you align your services with their needs. You may also be able to upsell your offerings
• You can discuss scope and pricing changes
• You can advise them on how to deal with relevant legislation changes
• Acquiring new clients is expensive. A new client can cost you five times more than retaining an existing client.

When setting new prices, applying a fixed percentage increase across the board may be the fastest approach. But without first reviewing the profitability of your clients, you won’t know if it’s effective.

It’s worth taking the time to review your client fees and then organise your client list into three categories:

• Profitable clients
• Breakeven clients
• Clients who are losing you money.

This way you can take an individual approach for each group.

It can be difficult to have a pricing conversation with an unprofitable client as their fees may need to be raised significantly, but the fact is even if you lose these clients, you will still be better off.

When you can centre the conversation around the value your practice can provide to the client, most clients will be happy to pay more for that value.

If you do receive pushback on your price increases, lay out some different options for your client, such as:

• Keeping your current price and reducing the scope of work
• Reimagining the scope of work and updating the pricing to reflect that.

Showcase the benefits of digital record-keeping to clients

Moving your clients to digital record-keeping is beneficial all-round.

It will save both your practice and your clients time and free you up to provide more value added services.

By kicking off these discussions at the start of the tax year, you have time to train up your clients and iron out any issues without the stress of approaching tax deadlines.

Here are a few points you can raise with your clients:

• They will be able to streamline their bookkeeping processes, automate repetitive tasks, and access information quickly, allowing them to focus more on core business activities.
• Digital systems can improve accuracy and ensure compliance with tax regulations, using automated calculations and built-in validation checks.
• Digital record-keeping provides clients with real-time insights into their financial performance and means they can make informed decisions promptly. Cloud-based platforms also enable seamless sharing of documents and collaboration in real time, regardless of location (which is particularly useful for remote workers).
• Digital record-keeping systems can scale with clients’ businesses as they grow. Digital solutions offer the flexibility to meet changing needs whether clients are expanding operations, adding new locations, or increasing transaction volumes.

As an example, clients who work under the Construction Industry Scheme (CIS) often overpay tax and wait to receive an income tax refund once their return has been processed.

There’s a big incentive for these clients to move to digital bookkeeping where they can capture income and expenses simply, file their Self Assessment tax return early, and ultimately get their refunds faster.

Automate processes to make your practice more efficient

Automating processes allows you to take your attention off tedious manual tasks and free up valuable time for more strategic activities.

Sage’s MTD Agent applies agentic AI right where you need it most right now. We’ve discussed this in a couple of recent blogs that should be considered essential reading:

More generally, accounting software can remove the need for data entry by integrating with bank feeds, invoices, and expense receipts. This means transactions can be automatically imported, categorised, and reconciled with minimal intervention.

For example, AutoEntry by Sage is an AI powered tool that captures data from photos of receipts and invoices and automatically uploads it into Sage Accounting.

By automating tasks early in the tax year you can take advantage of efficient workflows and streamline operations from the outset.

To assess what areas your practice could automate, work out where your team is spending the most time:

• If you have to manually copy over figures from clients’ ledgers to tax preparation software, you could implement integrated accounting and tax software that talk to each other.
• If you are wading through shoeboxes of receipts, you could implement expense management tools to track expenses and allow clients to snap photos of their receipts and upload them instantly.
• If tracking billable time is proving time-consuming, you can bring in invoicing software that tracks your time and helps you create and send client invoices efficiently.

Upskill and support your practice team

The new tax year is an ideal time to reassess your team’s development needs and take the time to upskill while everyone has a lighter workload.

Investing in ongoing development not only helps to grow your practice and your team’s skill sets, but means you can operate more efficiently too.

In addition to offering access to external courses like workshops and conferences, don’t forget that it can be just as useful to facilitate cross-training opportunities within the practice team.

Development covers a broad area, but it can be easy for accountants to only focus on developing core technical knowledge.

And while this is important for daily work, there are also more general skills that help accountants serve their clients better, including soft skills, cloud accounting, time management and customer service.

Final thoughts on preparing for the 2026/27 tax year

To continue growing your practice, you need to approach each new tax year as an opportunity to learn and adapt.

It’s the perfect time to reflect on your processes, reconnect with your clients and consider new ways of working that will invigorate your team.

Reaching out to clients at this time allows you to reaffirm your commitment to providing exceptional service, address any concerns or changes in circumstances, and align strategies for the year ahead.

When your business buys goods or services, you need a clear and organised system to track those transactions. That’s where Purchase Orders (POs) come in. 

A PO is a formal document that you send to a supplier to request goods or services, helping you stay in control of your finances, streamline procurement, and avoid miscommunication. 

In this guide, you’ll explore everything you need to know about purchase orders—what they are, how they differ from invoices, the different types of purchase orders, and why they’re essential for businesses of all sizes. 

Whether you run a small start-up or a large enterprise, understanding POs helps you keep your purchasing process efficient and hassle-free. 

Here’s what we’ll cover: 

Purchase order definition 

Ready to get a handle on purchase orders? The first step is understanding what they are and how they fit into your buying process. 

A purchase order can form part of a legally binding contract once it’s accepted by the supplier, subject to the agreed terms and conditions.

It acts as an official request and outlines all the important details to keep things clear and organised. A typical PO includes: 

• Purchase Order Number (PON): a unique reference number to track the order. 

• Buyer and seller details: company names, addresses, and contact information. 

• Order details: a breakdown of what you’re ordering—description, quantity, and price. 

• Payment terms: how and when payment will be made (e.g. payment on delivery or 30 days from invoice date) 

• Delivery details: where and when the order should be shipped.  

What is the difference between a purchase order vs invoice? 

Many people confuse purchase orders and invoices, but they serve completely different purposes in the buying process.  

So, what is the purpose of a purchase order?

It acts as a formal request from a buyer to a supplier, outlining the details of a purchase before the transaction takes place. In contrast, an invoice is sent after goods or services are delivered to request payment.  

To clear things up, here’s a quick breakdown: 

Who issues it? 

• PO: sent by the buyer to request goods or services. 

• Invoice: sent by the seller after delivering goods or services. 

When is it sent? 

• PO: sent before the transaction to confirm the order. 

• Invoice: sent after the transaction to request payment. 

What’s its purpose? 

• PO: lists order details, pricing, and terms that have been agreed upon. 

• Invoice: requests payment from the buyer. 

Is it legally binding? 

• PO: yes—once the seller accepts it, it becomes a contract. 

• Invoice: yes—it confirms the amount due and payment terms based on the agreed contract. 

Think of a purchase order as setting up your business’s transaction, and an invoice as finalising it by requesting payment.

Both documents keep things organised and protect both parties, making sure you and your seller are on the same page. 

Example of a purchase order 

A PO is typically a formal document with clearly labelled sections to ensure accurate transactions. Want a clearer picture of what does a purchase order look like? 

Here’s a purchase order example: 

Imagine you’re running a clothing company, and you’re preparing for the next season’s collection. 

You need to order fabric from a trusted supplier. Instead of relying on verbal agreements, you create a PO to outline exactly what you’re ordering. 

Here’s what a standard PO for fabric would include: 

1. Basic details for tracking 

• Purchase order number: a unique identifier for this specific order. 

• Purchase order date: the date the order was created. 

2. Buyer and vendor information 

• Vendor name and billing address: the supplier’s business details. 

• Buyer name and shipping address: your company’s details, including where the order should be delivered. 

• Additional contact information: phone numbers and email addresses for both parties. 

3. Shipping and delivery terms 

• Delivery date: the expected or agreed-upon date for the goods to arrive. 

• Shipping method: the chosen transportation method (e.g., standard freight, express delivery). 

• Shipping terms: who is responsible for shipping costs and potential damage. 

4. Order details 

• Item name: the product being ordered (e.g., “cotton fabric – light blue”). 

• Item description and technical information: specifications such as material composition, weight, and texture. 

• Item quantity: the number of units ordered (e.g., 50 metres). 

• Item unit cost: the price per unit measurement (e.g., £10 per metre).

• Line total: the cost for each item category (e.g., 50 metres x £10 = £500). 

5. Cost breakdown and payment terms 

• Taxes: any applicable VAT or other relevant taxes. 

• Total price: the final cost after taxes and discounts. 

• Payment terms: how and when payment is expected (e.g., “Net 30 – payment due within 30 days”). 

Types of purchase orders 

The type of PO you use depends on your business needs and level of commitment to suppliers.

Understanding why and when to use each type makes sure your POs are accurate, efficient, and aligned with your purchasing strategy. 

Here’s a breakdown of the four main types of purchase orders and when to use them: 

1. Standard Purchase Order (SPO) 

SPO is the most common type of order, used for one-time purchases with clearly defined details. It includes exact specifications, such as quantity, price, and delivery date.

For example, you need to upgrade the chairs in your office and order 50 office chairs from a furniture supplier that must be delivered within 5 days. 

2. Planned Purchase Order (PPO) 

This type is similar to a standard PO, but with estimated order quantities and dates. 

It helps your business forecast and plan future purchases, ideal when you know you need a specific product or service but not the exact delivery schedule.

For example, you manage a restaurant and need to estimate monthly supply orders for fresh produce. 

3. Blanket Purchase Order (BPO) 

Also known as standing orders, blanket purchase orders are ideal for recurring purchases over a set period.

It locks in pricing and terms upfront, but you can decide on specific quantities and delivery dates later. 

If your business has ongoing supplier relationships, a BPO can streamline your purchase order process and ensure you always have the supplies you need.

For example, you run a printing company that orders bulk paper supplies throughout the year as needed. Instead of placing multiple individual orders, a BPO simplifies the process and keeps costs predictable. 

4. Contract Purchase Order (CPO) 

CPO is the most flexible type of PO. It establishes a long-term agreement with a supplier but doesn’t specify exact order quantities upfront. 

You’ll typically use a CPO when you expect to make multiple purchases from the same supplier over time but don’t yet have firm details. Example: you handle accounting for a construction company that partners with a supplier for various building projects. Since material needs change from project to project, a CPO keeps the relationship in place without committing to specific quantities right away. 

The right purchase order depends on how often you buy, your supplier relationships, and the level of flexibility you need. Whether you’re placing a one-time bulk order or setting up long-term agreements, choosing the right type—such as electronic purchase orders—helps keep your purchasing process organised, efficient, and stress-free. 

Why use purchase orders in business? 

No matter the size of your business, purchase orders help keep your buying process organised and efficient. Whether you’re placing a simple order or managing complex transactions, the benefits of purchase orders include greater clarity, improved accountability, and better financial control. 

Here’s why they’re essential for both buyers and sellers: 

Benefits for buyers 

• Stay on budget—pre-approved orders help prevent overspending and keep finances in check. 

• Better record-keeping—creates a clear paper trail for tracking expenses and making audits easier. 

• Strong supplier relationships—ensure on-time, accurate deliveries, reducing the risk of delays or mix-ups. 

• Protect against fraud and disputes—serves as a legally binding agreement, helping you avoid payment issues or audit headaches. 

Benefits for sellers 

• Fewer errors and misunderstandings—clearly outline order details, reducing the chance of miscommunication. 

• Guaranteed payment security—acts as a contract, making sure you get paid for the goods or services you provide. 

• Easier inventory management—helps plan stock levels more effectively based on confirmed orders. 

• Faster processing and payments—streamlines invoicing and speeds up the payment collection process. 

Simplify your purchasing process with digital purchase orders 

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HR and payroll leaders are being asked to do more than ever, often with limited time and growing expectations.

Expectations are rising, ways of working are shifting and technology is advancing faster than many teams can comfortably absorb.

At the same time, the fundamentals have not changed.

People still expect to be paid accurately and on time.

Managers still need support. Employees still expect clarity, fairness, and trust.

To understand how HR and payroll professionals are navigating this reality, Sage surveyed 1,000 HR and payroll leaders at small and medium-sized businesses across the UK, Ireland, and South Africa.

The findings reveal a profession that feels confident in its purpose, but under growing pressure.

Leaders are optimistic about the future of HR and payroll, yet many are carrying heavier workloads, facing widening skills gaps, and weighing up how to adopt AI responsibly.

The HR and Payroll Leaders’ Report explores these challenges in depth and sets out where leaders are focusing their attention next.

Download the report to learn:

• How HR and payroll leaders really feel about their roles today, including where confidence is growing and where concern remains
• Why skills gaps, workload pressure, and trust in technology are shaping priorities across organisations
• What practical steps leaders are taking to modernise HR and payroll while protecting accuracy, compliance, and employee confidence

Download The HR and Payroll Leaders’ Report

Here’s what we’ll cover:

Confident in the profession, uncertain about the future

More than 90% of HR and payroll leaders say they feel satisfied and successful in their roles, according to the Sage research.

Many feel energised by the direction of the profession and the chance to play a more strategic role.

At the same time, 48% say they feel anxious about the future of their own role.

That tension runs through the research.

Leaders believe HR and payroll are more important than ever, yet workloads are increasing and expectations continue to grow.

Across both small and medium-sized businesses, leaders say they feel responsible for culture, wellbeing, compliance, skills planning, and technology adoption.

For leaders in medium-sized organisations, technology and systems integration often feature more heavily, while leaders in smaller businesses place greater emphasis on culture and day-to-day people support.

This mix of confidence and concern reflects a shift in how the HR and payroll role is defined and experienced.

HR leaders are being asked to do more, influence more, and adapt faster than before.

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“Strategically align HR function with business objectives to improve organisation performance”

Personnel Director, Business services

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The pressure behind the progress

One of the clearest findings from the research is the strain many leaders are working under.

71% of HR and payroll leaders say their workload has increased over the past year, and more than half report feeling a sense of burnout.

Administrative and compliance tasks still take up a large share of the working week, even as strategic expectations rise.

Many leaders say their impact is not always fully understood by the wider business.

HR is still too often seen as process-led, rather than as a driver of long-term value.

This creates a difficult balance.

You’re expected to lead change while keeping day-to-day operations running smoothly.

You’re asked to support managers and employees, while also building future capability across the organisation.

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“I would prioritise the development of strong wellbeing initiatives, equitable opportunities for growth and open communication”

HR recruiter, Business services

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Skills gaps are widening, not shrinking

The research also points to a growing skills challenge, both within HR teams and across the wider workforce.

More than half of leaders say skills gaps in their organisation have increased over the past two years.

Technology, data, and AI skills are now seen as essential, yet many teams lack the training or confidence to use new tools fully.

In response, HR leaders are shifting how they think about talent.                                                      

Skills-based hiring, workforce planning, and long-term development are becoming more important than relying on job titles alone when making people decisions.

This puts HR and payroll at the centre of future readiness.

But it also adds to the pressure.

Closing skills gaps takes time, data, and support.  

Without the right foundations in place, this can feel like another responsibility added by the wider business onto an already full role.

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“To make sure every employee has a clear career growth path”

Head of HR, Professional services

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Artificial Intelligence brings opportunity and risk

AI is widely seen as a major opportunity for HR and payroll.

86% of HR and payroll leaders believe AI will transform the function, largely by freeing up time and improving accuracy.

Yet it’s also one of the areas causing the most concern.

Many leaders worry about compliance, particularly around the use of AI in HR and payroll, and the potential impact on employee trust.

Fragmented HR and payroll systems, alongside limited training, make it harder to adopt AI and automation with confidence.

The research shows a clear desire for responsible use.

Leaders want tools that reduce administrative effort while supporting employees to do their best work and enabling informed human judgement.

They want technology that supports human judgement, not replaces it.

Payroll plays a critical role in responsible technology adoption.

When automation or AI is involved, accuracy and timeliness become even more important for maintaining trust.

When HR and payroll systems are well connected, it becomes easier to introduce automation and AI in a controlled way, particularly in areas such as pay, compliance checks, and workforce data.

When those systems are fragmented, even small AI‑supported decisions can create errors or uncertainty, which can quickly undermine trust.

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“I wish I could build an AI employee management system that automates repetitive tasks. Allowing more time to focus on people”

Recruitment Manager, Technology

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What this means for HR and payroll leaders

Taken together, the findings highlight a choice facing HR and payroll leaders.

There’s strong belief in the future of HR and payroll.

At the same time, leaders point to the need for better support for HR teams and more connected HR and payroll systems.

Progress doesn’t require doing everything at once.

Many leaders are already taking practical steps, from automating repetitive tasks to building clearer skills plans and putting simple governance around new technology.

The most successful changes tend to start by focusing on a small number of priorities, such as:

• Reducing administrative load.
• Protecting trust.
• Creating space to spend more time on people and less time on process.

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“Fully integrated, AI-driven analytics platform that combines all HR Data…into one intelligent dashboard”

HR Director, Construction

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Explore the full findings

This article offers a snapshot of the themes shaping HR and payroll today.

The full HR and Payroll Leaders’ Report goes deeper, with detailed insights, practical frameworks and clear next steps drawn from the experiences of 1,000 leaders.

If you want to benchmark your challenges, understand how peers are responding to the challenges highlighted in the research and see where to focus next, download the report now.

Download The HR and Payroll Leaders’ Report

What does ‘fair pay’ actually mean in the UK right now, are the salaries you’re offering competitive enough to attract new talent?

And how do your team’s current earnings stack up against people of a similar age, region, or industry?

The latest Annual Survey of Hours and Earnings (ASHE) salary data from the Office for National Statistics (ONS) helps answer those questions.

Median annual pay for all employees now is £32,890, and full-time workers earn around £39,039.

But the national median only tells part of the story.

Pay varies significantly by region, industry, occupation, gender and age, and those differences can have a real impact on your hiring plans and retention strategy.

In this guide, you’ll find an insight into how salaries vary across the UK.

You’ll see how different groups compare, how pay has shifted over time and where the biggest changes are happening, so you can plan with a little more clarity and a lot less guesswork.

Here’s what we’ll cover:

Key insights

The following are seven important trends we took from the latest Annual Survey of Hours and Earnings by the ONS.

These points give you a fast snapshot of where salaries are heading in the UK and how they may influence your hiring and payroll planning this year.

1. Median pay continues to rise across the UK.

The median annual salary for all employees is £32,890, which represents 4.1% growth from last year.

Full-time workers earn £39,039, and part-time workers earn £14,713.

Part-time pay is rising, which can affect how businesses structure flexible roles.

2. Regional pay differences remain pronounced.

London has the highest median annual earnings at £39,778, while the North East sits at £29,584 with a difference of 25%.

The South East, Scotland, and parts of the East of England also report above-average earnings.

3. The 40–49 age group earns the highest median pay.

Employees in this group earn a median of £37,734, the highest of any age bracket.

Salaries level off slightly after age 50, which mirrors long-term patterns in the dataset.

4. A notable gender pay gap is still present.

Men earn a median salary of £38,466, while women earn £27,850, which is a difference of 28%.

The Gender Pay Gap total median is 12.8.

5. High-skill industries lead the upper pay ranges.

Roles in aviation, information technology, senior leadership, engineering, and medicine record some of the highest median salaries in the UK.

Many exceed £50,000, and some significantly exceed that benchmark.

6. Lower-paying industries create different planning pressures.

Care, hospitality, retail, sports and entry-level administrative roles often fall below the £15,000 range.

These roles tend to have higher turnover and more pressure on progression paths, which can influence how small businesses plan staffing and pay reviews.

7. The long-term trend still points upward.

Most categories show steady increases over the past decade.

The pace varies across industries and age groups, which affects how you plan future pay growth and budget for annual reviews.

Keep reading to see how earnings vary by region, age, gender, industry, and occupation, so you can build salary ranges that fit both your market and your budget.

What is the average salary in the UK?

For all employees in 2025, the median annual salary is £32,890.

This figure includes both full-time and part-time workers.

Median pay rose 4.1% from the previous year, which gives you a sense of how quickly wages are moving.

Average salaries in the UK:

• Annual median, full-time employees: £39,039
• Annual median, part-time employees: £14,713
• Mean average salary, all employees: £40,269
• Median weekly pay, all employees: £642.50
• Median hourly pay, all employees: £18.00

Understanding the difference between mean and median is important if you’re using this data to plan salaries.

• Mean: This is the traditional “average,” all salaries added together, divided by the number of jobs. The mean is not always a reliable measure as it can be skewed by a relatively small number of very low or high-paying roles.
• Median: This is the middle point of the pay distribution; 50% of jobs pay less than this figure, and 50% pay more. Because it ignores extreme outliers, the ONS prefers the median as the better indicator of “typical” pay.

The salary data helps you to compare your salaries with the wider market and see how different types of roles affect your overall costs.

Part-time earnings, for example, rose 5.9%, compared with 4.3% for full-time roles.

If your business relies heavily on flexible or variable-hours work, that difference may shape what you’ll need to budget for in the year ahead.

It’s also worth considering that the minimum wage was increased in the November 2025 budget and the impact that may have on the figures for the coming year.

Average UK salary by region

Not surprisingly, where you work has a big influence on what you earn in the UK.

Some regions lean heavily on professional and technical jobs, which naturally pushes salaries higher.

Others have more roles in hospitality, care or retail, and that brings the local median down.

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Median annual salary by region

The latest data shows clear differences in pay from one region to another.

Here’s a look at the median salary in each part of the UK, based on employees on adult rates who’ve been in the same job for more than a year.

Region	Number of jobs (thousand)	Annual Median (£)
North East	882	29,584
North West	2,731	31,330
Yorkshire and The Humber	1,996	30,682
East Midlands	1,800	30,690
West Midlands	2,060	31,345
East	2,385	34,104
London	2,971	39,778
South East	3,523	35,215
South West	2,122	31,432
Wales	1,202	30,732
Scotland	2,204	33,061
Northern Ireland	883	31,252

Note: The numbers shown above are based on annual salary. ONS caveats that all numbers are intended to provide a broad idea of the number of employee jobs, but they should not be considered accurate estimates.  

Highest and lowest-paying local authorities

Local authority data gives you an even closer look at how pay levels vary.

Many of the highest-earning areas are in London or in the commuter towns surrounding it, where higher-paid roles are more concentrated.

Top 10 highest-paying local authorities

Local authority	Number of jobs (thousand)	Median (£)
Wandsworth	107	49,310
Islington	77	47,411
Kensington and Chelsea	36	46,690
Richmond upon Thames	61	46,594
St Albans	53	45,543
Tower Hamlets	106	45,183
Westminster	58	45,172
East Hertfordshire	60	44,154
Camden	67	44,088
Bromley	118	43,981
Lambeth	115	43,666

Note: All employees on adult rates in the same job for at least a year.

Most of these areas fall either within London or just outside it.

Places like Tower Hamlets, Westminster and Camden sit right next to the City and Canary Wharf, where finance and professional services push salaries well above the national average.

Nearby orbital towns such as Richmond, St Albans and East Hertfordshire are all popular commuter towns with fast access to London and the City and exceptionally high-earning residents.

Top 10 lowest-paying local authorities

Local authority	Number of jobs (thousand)	Median (£)
Kingston upon Hull UA	91	27,309
Pembrokeshire / Sir Benfro	46	27,243
Moray	31	26,943
Denbighshire / Sir Ddinbych	38	26,812
Pendle	28	26,742
Isle of Wight UA	42	26,740
East Lindsey	40	26,705
Melton	16	26,633
West Devon	16	26,556
Nottingham UA	87	26,512
Gwynedd / Gwynedd	43	25,179

Note: All employees on adult rates in the same job for at least a year.

The regions above are all areas with lower-paying industries.

It’s important to note that the data here is based on annual salaries paid, which is different to a measure of the most deprived areas of the UK that would include unemployed data.

Rural and coastal locations tend to rely more on tourism and hospitality, which are lower-paid salaries.

Some places also have fewer large employers or professional roles, so salaries naturally sit below the national average.

Some areas may also have a higher retired population who do not work.

These factors can also impact regional salary levels.

What stands out in the regional data

London is the highest paying region in the UK, with median pay at £39,778.

This is not a surprise for a capital city which has a concentration of roles in finance, tech, legal services and global headquarters.

London will always be a magnet that attracts the best countrywide and worldwide talent for the career opportunities it offers.

Many people will ‘suffer’ the high cost of living to build their careers before moving to other regional areas such as the South East and East of England.

Commuter towns like St Albans and the East Hertfordshire region consistently show up among the highest-paying local authorities.

On the other end of the spectrum, the North East has the lowest regional median at £29,584.

The North East economy has been supported by car manufacturers such as Nissan in Sunderland and the area also has many call centres which take advantage of the lower wages.

Rural and coastal areas often look similar, especially where a lot of the work is part-time or seasonal, so overall earnings don’t climb as quickly as they do elsewhere.

Methodology: How the ONS calculates regional salary data

The figures in this section follow the ONS methodology for the Annual Survey of Hours and Earnings (ASHE):

• Estimates reflect employees on adult rates who have been in the same job for more than a year.
• Job counts are provided for context only and should not be treated as precise employment totals.
• Data quality varies by location and is measured through the coefficient of variation, which indicates the reliability of each estimate.

These details help place the results in context and explain why some regions or local authorities may show wider margins of uncertainty than others.

Download the Average UK Salary datasheet for all local authorities.

Average UK salary by age

Salaries rise and fall as people move through different stages of their careers, which reflects their experience and their rise in role seniority.

People tend to progress and hold higher roles as they have worked longer.

After a certain age, working people tend to again take roles with fewer demands and hours.

These patterns might be obvious, but they do help you to understand where pay pressure might show up in your own team and what people at different experience levels are likely to expect.

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Median annual salaries by age group in the UK:

Age group	Number of jobs (thousand)	Annual Median £	Hourly median £
All employees	24,897	32,890	17.96
18-21	825	13,069	12.59
22-29	3,454	29,855	15.88
30-39	6,229	36,000	19.70
40-49	5,987	37,734	20.65
50-59	5,403	34,835	19.31
60+	2,927	26,750	16.45

Note: Data is taken from employees on adult rates who held the same job for more than a year. The job counts are not precise and are only provided to offer scale.

Note: Data for hourly pay is different from the annual median and only includes those whose pay in the survey period wasn’t affected by absence.

Understanding age-based salary trends

The earnings by age figures reflect the shape of a typical career.

Pay rises quickly through the twenties and keeps building through the thirties, moving from a median of £29,855 at ages 22–29 to £36,000 for people in their thirties.

The highest career point comes in the 40–49 range at £37,734, which is often when experience, confidence and career progression come into effect.

After age 50, the pattern shifts and median pay drops to £34,835. By age 60+ pay declines to £26,750.

During these older age groups, there is natural attrition as some people take early retirement or reduce hours as they want to improve their work/life when mortgages are paid off and their financial position is more stable.

Workers can move into part-time or flexible work, especially if they’re preparing for retirement or managing health or family commitments.

In physically demanding fields, like construction, earnings can dip earlier as people move into lighter or more manageable roles.

Also, some people decide to switch roles or retrain later in their careers to try and fulfil their purpose in life after they have worked hard for many years.

Average UK salary by gender

The median salary for men is £38,466, compared with £27,850 for women, which is a 28% difference across all employees.

The biggest differences can be seen in full-time roles.

That’s largely because men hold more senior, technical or higher-earning positions.

Part-time pay looks closer, but that’s mostly because more women work in part-time roles where salaries are already grouped within similar bands.

Industry patterns highlight these differences even more.

 Some sectors with routine or entry-level work show wide gaps, such as delivery jobs and butchery.

In these areas, historically, there has been a bias of being considered male-oriented work.

Other occupations land much closer together.

Jobs like housing officers, youth and community workers, visual merchandisers, environmental health professionals and train drivers show only small differences between men and women.

These roles usually have clearer pay structures or standardised progression, which helps keep earnings aligned.

At the opposite end of the spectrum, the gap widens again in senior management, specialist technical fields and professional services.

These roles have long career ladders, and that’s where differences in progression, access to higher-paid positions and career breaks tend to show up most clearly over time.

Median earnings for men and women by region

Region	Male annual median £	Female annual median £	Annual difference*	GPG Median**
East Midlands	36,645	25,674	-30%	12.9
East of England	40,851	27,970	-32%	13.4
London	43,695	36,142	-17%	11.8
North East England	34,447	25,641	-26%	9.3
North West England	36,962	26,869	-27%	13.7
Northern Ireland	35,232	27,571	-22%	7.2
Scotland	38,918	28,917	-26%	9.4
South East England	41,801	29,186	-30%	15.8
South West England	37,291	26,114	-30%	13.3
Wales	35,654	26,372	-26%	9.7
West Midlands	37,052	25,815	-30%	15.3
Yorkshire and The Humber	35,999	25,756	-28%	12.3

* The difference between median annual salaries, not the official Gender Pay Gap.

** The Gender Pay Gap (GPG) is calculated as the difference between average hourly earnings (excluding overtime) of men and women as a proportion of average hourly earnings (excluding overtime) of men. For example, a 4% GPG denotes that women earn 4% less, on average, than men. Conversely, a -4% GPG denotes that women earn 4% more, on average, than men.

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Gender pay gap by region

Regions with the smallest gender pay gaps

In the areas below, women earn more than men.

Region	Gender pay gap
Scottish Borders	-13.2
Ealing	-10.2
Lewisham	-6.3
Gwynedd	-6.0
Eastbourne	-5.5

Regions with the largest gender pay gaps

The areas below show the most significant differences where men earn more than women.

Region	Gender pay gap
Ribble Valley	38.9
Mole Valley	36.6
Bracknell Forest	33.3
Rochford	32
South Staffordshire	31.5

Why the regional differences matter

Regional pay differences often come down to the types of jobs available in each area.

Some regions have a stronger mix of professional or technical roles, so salaries tend to be higher.

Others have more jobs in hospitality, care or retail, which naturally brings the median down.

You also see changes based on how many senior roles are available locally and how much competition there is for skilled workers.

And in places where part-time work is more common, earnings usually grow more slowly because the job mix looks different.

Looking at these patterns gives you a clearer sense of what people expect to earn where they live and work.

It also makes regional comparisons much more useful than relying on a single national number.

Average UK salary by industry/occupation

Highest paying industries

You’ll see the very highest salaries in the UK in fields where the bar to entry is naturally high, areas like aviation, specialist medical work and senior roles in technology.

These jobs pay well above the national median because they rely on investment in qualifications, deep expertise, strict training requirements or a level of responsibility that only a small group of people are qualified to take on.

When you compare these roles with jobs at the lower end of the pay scale, the gap becomes clear.

The lowest earners take home 91% less than the highest.

Industry	Number of jobs (thousand)	Median (£)
Aircraft pilots and air traffic controllers	20	107,712
Transport Associate Professionals	25	93,538
Information technology directors	60	90,081
Marketing, sales and advertising directors	216	90,000
Chief executives and senior officials	133	89,835
Specialist medical practitioners	187	88,997
Directors in Logistics, Warehousing and Transport	11	80,518
Train and tram drivers	26	76,176
Public relations and communications directors	N/A	72,020
Medical Practitioners	274	71,918

Across these roles, a few themes repeat.

Positions where decision-making responsibility is tied to financial or operational risk command the highest pay.

Sectors with complex systems or fast-moving environments also lean toward higher salaries because employers want people who can keep things running smoothly at scale.

Train drivers standing alongside medical practitioners and senior directors is one of the clearer outliers.

Their pay reflects the safety-critical nature of the role and the structured progression frameworks built into rail careers.

Lowest paying industries

At the other end of the pay scale, you see roles that make up much of the UK’s part-time, seasonal or high-turnover workforce and are generally considered to be ‘unskilled’.

You’ll find most of these jobs in hospitality, cleaning, catering and parts of sport and leisure.

These industries often run on tighter margins and offer fewer routes into higher-paying positions.

Even so, these roles play a big part in how many small businesses operate.

If your team includes flexible or variable-hours workers, understanding what these jobs typically pay can help you plan and stay competitive when demand picks up.

Industry	Number of jobs (thousand)	Annual Median £	Hourly Median £
Bar staff	84	9,166	12.21
Waiters and waitresses	146	10,000	12.21
Other Elementary Services Occupations	653	11,382	12.38
Kitchen and catering assistants	322	11,840	12.41
Cleaners and domestics	411	11,852	12.64
Coffee shop workers	16	12,170	12.30
Care escorts	14	12,175	13.26
Sports coaches, instructors and officials	62	12,570	15.60
Elementary Cleaning Occupations	469	12,787	12.70
Sports and Fitness Occupations	98	13,819	15.58

Note: These figures are based on the ONS ASHE dataset (October 2025) and show median pay for employees on adult rates who’ve been in the same job for at least a year. Hourly pay figures only include jobs where pay in the survey period wasn’t affected by absence. From April 2026, the minimum wage increases to £12.71 per hour, so treat the hourly medians here as a historic benchmark and make sure your current pay rates meet the legal minimum.

These occupations sit well below the national median.

Many rely on hourly staffing or operate within industries where wage growth flows more slowly because roles are widely available and entry requirements are minimal.

Even within this group, you can see subtle distinctions.

Sports and fitness roles, for example, sit slightly higher because qualifications or coaching licences shift the pay floor upward.

Most common professions

Professional occupations make up the biggest share of the UK workforce.

These are roles you see across education, healthcare, engineering, science and public services, and they generally sit well above the national median.

If you’re looking for where most mid-to-high-earning jobs fall, this is the group that sets much of that range.

You’ll also notice many directors, managers and administrative roles at the top of the list.

They make up a big part of white-collar employment and show the variety of work happening in office-based or specialist settings.

Then, at the other end, you have elementary and service-based jobs.

These roles are common across the country but tend to sit on the lower side of the pay scale, highlighting just how wide the UK’s earnings spread really is, even within the most familiar occupations.

What’s just as interesting is the work you don’t see as often.

Some professions are much smaller in number: farmers, hospital porters, street cleaners and certain warehouse or storage roles represent only a small slice of national employment.

Many of these jobs depend on niche skills, seasonal patterns or very specific operational needs, which keeps their overall job counts low even though they’re essential in the sectors they support.

Highest number of jobs by industry

Industry	Number of jobs (thousand)	Median £
Corporate managers and directors	2,268	57,745
Administrative occupations	2,134	27,006
Business, media and public service professionals	2,057	46,925
Elementary administration and service occupations	1,962	17,287
Business and public service associate professionals	1,883	38,760
Health professionals	1,816	40,294
Caring personal service occupations	1,811	21,082
Science, research, engineering and technology professionals	1,711	51,148
Teaching and other educational professionals	1,447	43,119
Teaching Professionals	1,266	42,660

Note: Data for is taken from employees on adult rates who held the same job for more than a year. The job counts are not precise and are only provided to offer scale.

Download the Average UK Salary datasheet for occupations and industries.

Average salary over last 25 years in the UK

When you look back over the last 25 years, you can see how steadily salaries have climbed in the UK, even if the journey hasn’t been perfectly smooth.

The early 2000s brought predictable year-on-year growth, but things slowed right down after the 2008 financial crisis, when earnings barely moved for several years before starting to pick up again.

From around 2015, pay began rising more consistently, and the biggest jumps show up in the most recent years.

That’s where you see the impact of post-Brexit labour shortages, rising demand for skilled workers and the inflation pressures that pushed wages higher across many sectors.

Altogether, the long-term trend moves upward, but each bend in the curve reflects what was happening in the wider economy at the time.

Looking at it, this way helps you understand why today’s salary expectations feel so different and why pay has accelerated so quickly in the past few years.

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All employees on adult rates whose pay for the survey period was unaffected by absence.

Estimates for 2020 and 2021 include employees who have been furloughed under the Coronavirus Job Retention Scheme (CJRS).

Annual earnings estimates relate to employees who have been in the same job for at least 12 months, regardless of whether their pay was affected by absence.

Comparisons between 2022 and 2023 data should be treated with caution due to methodological changes applied from 2023 onwards that improved how we validate data, particularly for high earners among each occupation.

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How to use UK salary data

For small businesses, salary data affects everything from payroll planning to hiring decisions.

When you understand what people earn across the UK, you can make clearer choices about how much to pay, when to hire and what growth will realistically cost.

Here are a few ways to put the data to work.

Financial planning

You want to bring in great people and pay them fairly, but can your business afford it?

What is the average salary for the roles you need and how does that compare with what you’re offering today?

With salary data in hand, you can set pay levels that feel competitive without stretching your budget.

The more you understand typical earnings in your region and industry, the easier it becomes to plan payroll costs and forecast what your team will cost over the next year.

Benchmarking your salaries

Replacing employees can get expensive quickly. In many cases, it’s far more cost-effective to keep the right people and reward them for staying.

But you can’t do that confidently unless you know what the market is paying.

When you benchmark your salary data against national and regional medians, you can know you’re ahead of the curve, keeping pace or sitting below similar businesses.

With that in mind, you can adjust your employees’ pay where it matters most.

Budget allocation

Salaries tend to make up the biggest part of your budget, no matter how you prefer to plan it.

That’s why having a sense of what people typically earn in the roles you hire for makes such a difference when you’re setting numbers for the year.

Once you know the usual salary range for your core positions, it becomes much easier to budget for new hires, build in expected wage growth and avoid underestimating your payroll costs.

And if you’re using accounting software, you can track these adjustments across teams or projects without having to rebuild your budget every time something changes.

Spotting market trends

How is the economy shaping wages in your sector and are salaries in your area rising quickly or moving at a slower pace?

Keeping an eye on average pay helps you spot changes before they reach your doorstep.

You can see when certain roles are starting to cost more, when wage growth suddenly picks up or when shortages are pushing salaries higher.

 That gives you time to adjust your plans instead of scrambling to catch up later.

It’s also useful for the bigger picture.

Looking at how salaries have shifted over the past decade and the direction they’re moving now helps you plan with more confidence and fewer surprises.

Planning for growth

If you’re planning to grow, salary data helps you understand what that expansion will cost.

Bringing on several new people, building out a new function or moving into a different type of work all come with their own pay expectations.

By checking typical salaries before you hire, you can get a clearer sense of whether your plans are financially realistic.

You’ll also see whether your business can keep up with rising expectations as it scales, or whether you may need to adjust pay to stay competitive over the next few years.

If you’re ready to build these insights into your payroll processes, Sage’s payroll software can help you manage salary changes, stay compliant and keep calculations running smoothly as regulations evolve.

You can explore the full set of features here.

FAQs

What is the average salary in the UK for 2026?

The current median annual salary is £32,890 according to the latest ONS data from October 2025.

Keep in mind that the median is just a starting point.

Some occupations move much faster than the national trend, such as tech-related roles, while others stay flat for years.

When you’re planning salaries for next year, comparing medians for both your industry and your region gives you a much clearer picture.

How much does the average person earn in London?

The median annual full-time salary in London is £39,778, which is 25% higher than the median salary across all regions.

That number reflects the work available in the capital, finance, professional services, law, tech and other roles that traditionally pay more than the national median.

Employers in London also offer higher salaries so they can compete in a tight labour market. Because of this, salaries climb higher and faster in London.

What is a top 10% salary in the UK?

The top 10% of earners make £69,381 per year or more.

You’ll often see these figures in executive roles, specialised technical fields, or specialist occupations with significant qualifications.

What’s striking about the top bracket is how quickly earnings escalate once you reach it.

While the median sits in the low £30,000s, the upper end rises sharply.

This widening gap shows how unevenly high-earning positions are distributed across the workforce.

If you’re assessing whether a salary is “top-tier,” it helps to compare it with both national percentiles and occupation-specific medians.

Many professions have their own internal hierarchy, and a top 10% salary nationally may be closer to average in some specialist industries such as medicine.

What is a good salary in the UK by age?

A “good” salary often depends on where you are in your career.

Workers in their early twenties typically benchmark around £13,000–£29,000, depending on whether they’re in full-time roles or moving into early-career paths.

By the late twenties, the median rises to £29,855, which becomes a common reference point for this age group.

In your thirties and forties, earnings rise more sharply.

Median pay reaches £36,000 for people aged 30–39 and £37,734 for those aged 40–49, which is often considered strong mid-career compensation.

These decades tend to include promotions, leadership responsibilities and industry specialisation.

After age 50, salaries tend to level off or decline slightly, dropping to £34,835, and then to £26,750 for employees aged 60+.

Career changes, part-time work, reduced hours and transitions toward retirement all contribute to this shift.

Looking at medians by occupation and not just age gives a clearer sense of what “good” looks like for your field.

What are the highest-paying jobs in the UK?

The highest-paid roles in the UK sit in a narrow group of professions, almost all tied to leadership, specialist expertise or safety-critical decision-making.

Top earners include aircraft pilots and air traffic controllers, IT directors, marketing and sales directors, CEOs, and specialist medical practitioners.

What stands out is how concentrated the top of the pay scale is.

These roles require either extensive training, deep technical skill, or responsibility that carries significant risk.

Running a company or directing a large technical function isn’t just about experience, it demands judgment, resilience and the ability to make decisions that influence entire organisations.

Pilots occupy one of the most regulated and high-stakes professions in the country. Their work involves years of training, recurrent testing, strict safety requirements and responsibility for hundreds of passengers at a time.

The salary reflects not just the flying itself, but the level of accountability built into the role.

When risk and expertise converge, pay typically rises with them.

While these top earnings may seem far removed from the national median, they help illustrate how wide the UK’s salary distribution is and how different the pathways can be for workers entering professional, technical or executive careers.

Sage accounting software includes solutions for budget management and payroll management, allowing you to simplify accounting workflows and automate processes, freeing up valuable time so you can focus on running your business.

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Methodology

All data is taken from the Office of National Statistics (ONS), Annual Survey for Hours and Earnings (ASHE) from 23rd October 2025 data release.

ASHE covers employee jobs in the United Kingdom. It does not cover the self-employed, nor does it cover employees not paid during the reference period.                                                          

Hourly and weekly estimates are provided for the pay period that included a specified date in April. They relate to employees on adult rates of pay, whose earnings for the survey pay period were not affected by absence.                   

Annual estimates are provided for the tax year that ended on 5th April in the reference year. They relate to employees on adult rates of pay who have been in the same job for more than a year.

ASHE is based on a 1% sample of jobs taken from HM Revenue and Customs’ Pay As You Earn (PAYE) records. Consequently, individuals with more than one job may appear in the sample more than once.

ASHE data are weighted to UK population totals from the Labour Force Survey (LFS) based on classes defined by region, occupation, age and sex.

When you’re running a business, there’s no shortage of urgent priorities competing for your attention.

But tax deadlines for things like VAT, PAYE, National Insurance and Corporation Tax aren’t optional.

Missing them can quickly become expensive.

Staying on top of your tax dates isn’t just a legal requirement.

It helps you avoid fines, interest and penalties, and gives you better control over your finances.

When you know what’s due and when, it’s far easier to plan ahead, manage cash flow and make informed decisions throughout the year.

That’s where this guide comes in.

We’ve pulled together all the key UK tax dates and deadlines you need to know, whether you’re self-employed or running small or medium business.

Add them to your diary now and take one more thing off your plate as you head into 2026.

Here’s what we cover:

What date does the tax year start and end?

The personal tax year runs from 6 April to 5 April the following year.

Also known as the fiscal year, this is the period during which any calculations, assessments and financial reporting will be based for individuals and sole traders.

By the end of the period, you’ll need to have your income and expenses in order, ready to submit to HMRC.

The deadline for filing your self-assessment tax return is 31st January following the end of the tax year.

The first time you file, your tax will also be due for payment by the 31st of January.

However, later years are paid in advance, known as ‘payment on account’.

Payments are calculated by taking your bill for the previous year, and paying half that amount on the 31st of January, and half again on the 31st of July.

When your next tax return is calculated, these two payments on account are deducted, and the balance paid to HRMC.

For limited companies it is a little different.

In this case, the tax and reporting deadlines depend on the business year-end.

Your financial statements must be filed with Companies House no later than nine months after the period-end.

Your corporation tax is due for payment nine months and 1 day after your period-end.

Your corporation tax return is due for filing with HMRC 12 months after your period-end.

Here are the key UK tax year deadlines at a glance.

All tax dates and deadlines to know for 2026

Tax year dates for Self Assessment

31 January 2026	Online self-assessment to be submitted following the end of the tax year 2024/25
31 January 2026	Deadline for paying tax due for the 2024/25 tax year
31 January 2026	First payment on account for the 2025/26 tax year
5 April 2026	End of the 2025/26 tax year (Last chance to claim any overpaid tax from the 2020/21 tax year, as claims for overpaid tax have a four-year limit from the end of the relevant tax year.)
6 April 2026	Start of the 2026/27 tax year
31 July 2026	Second payment on account for the 2025/26 tax year
5 October 2026	Deadline to register for Self Assessment for the 2025/26 tax year
31 October 2026	Paper self-assessment to be submitted following the end of the tax year 2025/26
30 December 2026	Deadline to submit your tax return online to be able to pay your outstanding tax bill through your PAYE tax code if you qualify
31 January 2027	Online self-assessment to be submitted following the end of the tax year 2025/26

Tax year dates for limited companies

9 months after your company’s financial year ends	Deadline to submit your annual accounts to Companies House
9 months and 1 day after the company’s financial year ends	Deadline to pay your corporation tax
12 months after the company’s year-end	Deadline to file the company’s CT600 Company tax return
12 months after the company was set up, (or 12 months after the last confirmation statement date)	Deadline to submit the confirmation statement to Companies House
9 months after the company’s financial year ends	Deadline to submit dormant accounts (for companies not actively trading)

Tax year dates for LLPs

31 October following the end of the tax year – paper filing   31 January following the end of the tax year – online filing	Deadline to file your tax return when the partners are individuals
9 months after the end of the corresponding tax period – paper filing   12 months after the end of the corresponding period – online filing	Deadline to file tax returns when there are only corporate partners
Every 12 months from the date of the firm’s incorporation or 12 months after the last statement was submitted   (You have 14 days to file the confirmation statement after the conclusion of each 12-month period)	Deadline to submit your confirmation statement
9 months after the conclusion of the firm’s financial year (no later)	Deadline to submit the annual accounts to Companies House

Tax year dates for employers, including PAYE

No sooner than two months and no later than four weeks before first pay day	New employers register for PAYE
On or before each payday   (you also need to inform HMRC when you are making the last one of the tax year)	Submit a Full Payment Submission (FPS)
Every 19th monthly	PAYE, CIS and NIC payment to HMRC due by post
Every 22nd monthly	PAYE, CIS and NIC payment to HMRC due electronically
6 April 2026	Update employee payroll records for the new tax year
19 April 2026	Submit the final Employer Payment Summary for the previous year, and pay any tax or National Insurance Contributions (NICs) due
31 May 2026	Give P60s to employees who were on payroll on the last day of the last tax year
6 July 2026	Report employee expenses and benefits and submit your P11D and P11D(b) forms
19 July 2026	Deadline to pay Class 1A NICs by post
22 July 2026	Deadline to pay Class 1A NICs electronically

Deadlines for submitting VAT

Value Added Tax (VAT) is a consumption tax, typically charged at the standard rate of 20%, although reduced and zero rates may apply depending on the goods or services.

A registered business collects, holds and then pays this tax to HMRC on a (usually) quarterly basis.

Up to a turnover of £90,000 a business can choose to register for VAT and over this threshold, you are legally required to register for VAT.

At this point, you have 30 days to register.

You may voluntarily choose to register your business for VAT at any time, regardless of your turnover.

Most VAT-registered businesses submit their VAT returns and payments to HMRC on a quarterly basis.

For businesses with a turnover less than £1.35 million, they can elect for the VAT Annual Accounting Scheme to be paid once a year in advance.

The deadline for each VAT return and payment is one month and seven days after the end of the last period.

That means for the period ending 31 March, the return will need to be submitted by, and the payment made before 7 May.

For the period ending 31 December, the deadline would be 7 February the following year, and so on.

Quarterly VAT periods and payment deadlines (an example of)

Quarter	Period start	Period end	Payment due
Q1	1 January	31 March	7 May
Q2	1 April	30 June	7 August
Q3	1 July	30 September	7 November
Q4	1 October	31 December	7 February

Does the tax deadline include making payments?

The tax deadlines do not always include making payments.

Usually, there is a deadline to file and then the payment deadline will be on a different date.

For example, self-assessment is paid in advance.

Corporation tax is paid in advance of the filing deadline.

VAT payment is due the same day as the filing deadline and PAYE is paid after the filing deadline.

What should I do if I can’t pay on time?

If you can’t pay on time, for whatever reason, the first step is to contact HMRC to arrange a payment plan.

If you are self-employed and don’t already have an existing payment plan or debts with HMRC, you can do this online, but only if you owe less than £30,000.

You also need to have filed your latest tax return, and be within 60 days of the payment deadline, which is another reason to keep on top of these dates.

If you can’t pay your employer’s PAYE contributions, owe £100,000 or less, do not already have existing debts to HMRC, and have not sent any employers’ PAYE submissions and Construction Industry Scheme (CIS) returns that are due, then there is also an option to set up a payment plan online.

In this case, the criteria are that you plan to pay the debt off within 12 months and do not have any other payment plans or debts with HMRC.

A similar option is available if you owe VAT to HMRC.

This is also possible to do online if you owe £100,000 or less, plan to pay off the debt within the next 12 months and do not have any other payment plans or debts with HMRC.

You also need to have kept on top of your tax returns to date.

If you’re in the Cash Accounting Scheme, Annual Accounting Scheme, or you make payments on account, then an online payment plan is not an option.

If you are unable to set up a payment plan online, speak to HMRC to discuss a realistic proposal for paying your debts. Note that if you are late filing or paying VAT, you accrue penalty points and there is a late payment penalty.

What if I miss the deadline?

If you miss the deadline for submitting or paying your Self Assessment bill, you’ll face a fine of £100 and be charged interest on any late payments.

If you take longer than three months, the fine will start increasing, and the interest will keep accruing.

Limited companies that file accounts to Companies House late are also fined.

In this case, it starts at £150 if the accounts are filed within one month after the deadline.

If you file late but within three months of the deadline, then the fine is £375, and within six months the fine is £750. After that the penalty is £1500.

How do I apply for an extension?

If you’re running a Limited Company and have been affected by events outside of your control, then you can apply to extend your account filing deadline through Companies House.

 You have to make an application before the filing deadline passes, so if you are expecting this to be an issue, it’s worth acting sooner rather than later.

Bear in mind that you can’t apply for an extension just because of everyday challenges – the example HMRC gives is a situation such as a fire destroying your company records.

If you’ve got a good reason, you can apply for an extension by post or online via Companies House.

You’ll need to provide an explanation for why you need the extension and ideally provide some evidence and documentation to support it.

What is the first day you can submit tax returns for the previous year?

A tax return for the previous year can be submitted the moment the new tax year starts.

That means you can submit your Self Assessment tax return on the 6th of April.

Should I submit my tax return early?

Submitting your tax return early takes the pressure off when deadlines are approaching.

Instead of rushing to pull everything together at the last minute, you have time to get your accounts in order and make more considered decisions about your finances.

With more breathing room, you can review your allowable expenses properly, which could help reduce your overall tax bill.

Filing early also means you’re more likely to receive any tax refund you’re owed sooner.

It reduces the risk of missing deadlines and facing penalties and frees up your headspace so you can focus on running your business rather than worrying about paperwork.

Early submission also makes financial planning for the year ahead much easier.

The sooner you file, the sooner you’ll know exactly how much tax you need to pay and you’ll have longer to prepare for it.

This can be particularly helpful if you have a larger bill or need to plan for payments on account.

Remember: just because you submit your tax return early, doesn’t mean you have to pay early.

What is Making Tax Digital?

Making Tax Digital (MTD) is a government initiative designed to modernise the UK tax system and make it easier for businesses and individuals to get their tax right.

The aim is to improve accuracy, reduce errors and help taxpayers stay compliant.

Under MTD, businesses and self-employed people must keep their financial records digitally rather than on paper or spreadsheets alone.

They also need to use MTD-compatible software to record their income and expenses and submit information to HMRC.

You’ll be able to see your tax records, liabilities and payments through your HMRC online account, giving you a clearer, up-to-date view of what you owe.

Instead of submitting annual tax returns, taxpayers may be required to send updates to HMRC every quarter, depending on their circumstances.

From April 2019, VAT-registered businesses with a turnover above the VAT threshold (was £85,000 but is now £90,000) were the first to be required to use MTD for VAT returns.

All VAT-registered businesses must now use MTD for VAT.

From April 2026, self-employed individuals and landlords with income over £50,000 must follow MTD for Income Tax Self Assessment (ITSA) and maintain digital records and update HMRC each quarter using compatible software.

From April 2027, this will extend to those with income over £30,000. Corporation tax is still in the planning stages and is not expected to be implemented before 2026.

Final thoughts

Being on top of accounting and payroll means that you have more time to focus on running your business.

Working smarter with payroll software can significantly help in tax and PAYE preparation to make sure you are always ready for deadlines.

FAQs

What are ‘tax weeks’ and ‘tax months’ in the UK?

In the UK, tax weeks and tax months are used by HMRC for payroll and PAYE reporting. They don’t follow the standard calendar months.

The tax year always runs from 6 April to 5 April the following year. From this,

• A tax month runs from 6th of one month to 5th of the next

Each tax year is divided into:

• 52 tax weeks (sometimes 53 in certain years)
• 12 tax months

These periods are used to work out and report income tax and National Insurance for employees, especially where payroll is run weekly or monthly.

For example, tax month 1 runs from 6 April to 5 May, while tax week 1 runs from 6 April to 12 April.

Even if you pay staff on the same calendar date each month, HMRC still bases PAYE calculations on these tax periods.

Understanding tax weeks and months helps you submit accurate payroll information, avoid reporting errors and stay compliant with HMRC deadlines.

Can you file a tax return before the tax year ends?

In most cases, no, you can’t submit a Self Assessment tax return before the tax year has officially ended on 5 April.

That’s because HMRC needs a complete picture of your income, expenses and tax paid for the full tax year before a return can be filed.

Until the tax year closes, some figures, such as final income totals or allowable expenses, may not be accurate.

However, you can prepare in advance.

Many people use the months leading up to the end of the tax year to:

• Gather records and receipts
• Review income and expenses
• Check allowances and reliefs
• Estimate how much tax they’re likely to owe

Once the tax year ends on 5 April, you can submit your Self Assessment tax return straight away.

Filing early gives you more time to plan for any tax due and helps avoid last-minute pressure ahead of the January deadline.

Do VAT deadlines align with tax year dates?

Not usually. VAT deadlines don’t normally follow the UK tax year, which runs from 6 April to 5 April.

Most VAT-registered businesses submit returns quarterly, and their VAT periods are based on the date they registered for VAT, not the tax year.

 This means your VAT quarters may start and end at different points in the year.

For example, a typical VAT quarter might run from 1 January to 31 March or 1 February to 30 April, rather than lining up with the tax year.

VAT returns are usually due one month and seven days after the end of each VAT period.

If you use the VAT Annual Accounting Scheme, you’ll submit one return per year instead, but your VAT year still won’t usually match the tax year dates.

Because VAT and tax year deadlines often overlap, it’s important to track them separately.

Knowing when each deadline falls can help you manage cash flow, avoid late submission penalties and stay compliant with HMRC.

Being on top of accounting and payroll means that you have more time to focus on running your business.

Working smarter with accounting and payroll software can significantly help in tax and PAYE preparation to make sure you are always ready for deadlines.

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This article was verified by a UK-based Accountant in January 2026. Accounting rules are complex and change frequently and we recommend you seek any accounting advice from a qualified accountant or tax professional.

Get your free small business toolkit

Need help with accounting, payroll and HR admin for your business? This toolkit comprises free templates and checklists to help you manage your key business admin tasks with ease.

Download the toolkit

No theory. No overhaul. Just one workflow, done properly.

Start with the repetitive task that’s draining your time every week.

If you want editable tools to follow along, download the full AI Action Workbook at any point below.

Here’s what we’ll cover:

What “using AI” looks like

You don’t have to become an AI expert or learn complex prompts.

 Simply remove one repetitive task that drains your time every week:

• invoices chased automatically
• receipts captured without manual entry
• cash-flow issues flagged early
• admin time reduced week by week

Example:

A small food business using AI-powered invoice chasing started getting paid up to 7 days faster, saving around 14 hours a week on admin.

One workflow, fixed properly.

The takeaway:

You don’t need to “do AI”.

Simply remove one repetitive task.

Step 1: Identify one task that’s eating your time

You might already know where your pain is. Common starting points:

• Chasing invoices
• Reconciling receipts
• Approving expenses
• Pulling reports together

Quick check:

If this task disappeared tomorrow, would you notice the difference by Friday?

That’s your first AI opportunity.

Step 2: Check your AI readiness

AI readiness isn’t about being technical. It’s about where you’re most prepared to start.

You’re ready to start if you’ve tried any AI tool, have any repeatable admin task, or keep financial data reasonably up to date.

Don’t wait until everything is perfect. Just get started.

AI works best when it’s tied to a single outcome, such as:

• saving time
• improving accuracy
• improving cash flow

Then you choose 1–2 tools that support that goal.

Example combinations you can use:

• Save time → AI assistant + automated data capture
• Improve accuracy → accounting software + workflow automation
• Improve cash flow → automated invoicing + payment reminders

Step 4: Map one simple workflow

This is where AI becomes real.

Take one task and define:

• the tool
• who owns it
• what “better” looks like

Example:

Invoice follow-up → Sage Copilot→ owned by you → faster payments

That’s enough to start.

Businesses that standardise one workflow properly often remove days of admin over a month—not minutes.

The workbook includes an editable workflow template you can use to do it yourself.

Step 5: Measure what matters

You don’t need perfect ROI models.

Rough tracking works:

• hours saved per week
• fewer errors
• faster payments

Simple calculation used in the workbook:

Hours saved per week × 52 × hourly rate = annual value

Even modest savings add up fast—some small firms see five-figure value simply by tracking time they used to ignore.

Step 6: Build momentum over 30 days

The goal isn’t scale. It’s consistency.

A simple 4-week pattern:

• Week 1: test one workflow
• Week 2: review what worked
• Week 3: add one small improvement
• Week 4: lock it in as standard

By the end of 30 days, you’re no longer “trying AI”.

You’re using it.

This page gives you the full approach.

The AI Action Workbook gives you:

• fillable tables
• workflow templates
• a readiness quiz
• a 30-day planner

Use it alongside this page to turn insight into action.

Want the editable tools to follow along?

The AI Action Workbook includes fillable tables, workflow templates, a readiness quiz, and a simple 30-day planner.