The leap years allow for self-employed workers to marginally boost their bank accounts, while employees who are paid a fixed annual wage will spend the day working for free.
Assessing the impact of a leap year is economically complex and can prove to be problematic. For that reason, In the UK, the Office for National Statistics adjusts GDP (Gross Domestic Product) to make all Februaries comparable (28 and a quarter day long even on a leap year). Even though variables are modified to fit specific criteria, this does not change the fact that every leap year there is one extra day and no extra pay for the employed.
The analysis shows that paying for an extra day of food, gas, electricity, water and running a car would cost an average of £16.60. On the other hand, non-essential living costs typically counterbalance this loss, such as an extra day of accommodation, broadband or club memberships. Salaried employees will receive no boost for working an extra day, whereas self-employed people will benefit from an additional day of pay should they choose to work on that day.
Problems we encounter on a leap year is not limited to income and outgoings. Leap years also have tax complications on company accounts and individual tax payments which must be considered.
HMRC counts a year as a 12 months period rather than 365 days, so if your company's year-end is in February, you should prepare your accounts for the end of the month. No particular precaution is necessary. The situation is the same for invoicing on a leap day. If you are feeling hesitant to perform any accounting activities, or simply invoicing on the 29th of February, there is no reason not to do so thanks to HMRC's 12 months policy.
One problem you might encounter with leap years is if you are using a basic bookkeeping system or a simple spreadsheet to maintain your accounting records. To ensure you have tension-free leap year day, make sure to consult with a specialist.