There are several reasons to change your company’s year-end. You might want to align it with the tax year, use the same year-end across several companies, or move it to a date that better suits the way your business operates.
The process itself is fairly straightforward, but there are limits on how far you can extend an accounting period and how often you can do it.
In this guide, Kerry Newman, Head of SG Accounting, explains how to change your company’s accounting year-end, the rules you need to follow, and the effect a change can have on your accounts and Corporation Tax reporting.
What is your company’s accounting year-end?
Your company’s accounting year-end is the date on which its financial year finishes. Companies House refers to this as the accounting reference date (ARD).
For a newly incorporated company, the first accounting reference date is normally the last day of the month in which the first anniversary of incorporation falls.
For example, if you form a company on 15 September 2026, its first accounting reference date would normally be 30 September 2027.
Unless you change it, subsequent financial years will normally end on the same date each year.
Find out more in this Companies House guide: accounting reference dates and company accounts.
Why would you change your company’s year-end?
There is no particular need to change an established year-end if it already works well for your business.
However, there are several practical reasons a contractor or other small company owner might choose a different date.
1. To line up with the tax year
Some directors choose a 31 March year-end so that the company’s financial year falls almost exactly in line with the personal tax year.
This can make planning your salary and dividends more straightforward, as you’re working with roughly the same 12-month period for both company and personal tax purposes.
Of course, the company and your personal tax affairs remain entirely separate. The company still pays Corporation Tax on its profits, and you pay personal tax on income you receive from the company (salary + dividends).
Read more in our guide to the taxes IT contractors have to pay.
2. To align more than one company
If you own more than one company, having the same accounting year-end can make administration simpler.
Your accountant can prepare the accounts on a similar timetable, and it may be easier to compare the performance and financial position of the businesses.
This can become particularly useful where companies are associated for Corporation Tax purposes. Read our guide to associated companies and Corporation Tax for more information.
3. To avoid your busiest time of year
If your business has a particularly busy period, you may not want your accounting year-end to fall in the middle of it.
Moving the date can give you and your accountant a quieter period to review outstanding invoices, expenses, and accounting records.
This is less important for a straightforward one-person contracting company than for a larger or seasonal business, but it can still make life easier.
4. To fit a change in the business
You may also change your year-end following a significant change to the business.
For example, you might want a shorter accounting period before bringing in another shareholder, reorganising the company or making another substantial change.
There may also be circumstances in which changing the year-end is useful when preparing for a company’s sale or eventual closure.
5. For tax planning reasons
Changing an accounting year-end can affect the period in which profits are taxed and the timing of Corporation Tax payments.
That does not mean changing your year-end automatically reduces your tax bill. The consequences depend on the company’s circumstances, and changing an accounting period purely for a perceived tax advantage can create more work without producing much benefit.
Speak to your accountant before changing the date if tax planning is one of your reasons for doing so.
How do you change your company’s accounting year-end?
You change the accounting reference date through Companies House.
You can normally do this online using suitable company filing software or by submitting form AA01.
You can change the accounting reference date for the current accounting period or the immediately previous one, provided you are still within the permitted filing period.
If the accounts are already overdue, it is too late to change the accounting reference date for that period.
You can change your accounting reference date via Companies House.
Can you extend your company’s financial year?
Yes, but there are restrictions.
You cannot normally extend an accounting period beyond 18 months.
You are also normally limited to extending an accounting reference period once every five years.
There are exceptions. For example, different rules can apply if the company is in administration, you have approval from the Secretary of State, or you are aligning the accounting reference date with a UK parent or subsidiary company.
There are no additional restrictions on changing the company’s first accounting reference date.
Can you shorten your company’s financial year?
Yes. Under the current rules, you can generally shorten an accounting period as often as you like and by as many months as you like.
However, this is due to change.
Companies House says that from 1 April 2028, companies will need to provide a business reason if they want to shorten their accounting reference period more than once within five years. The change is subject to forthcoming regulations.
This is worth bearing in mind if you are considering changing your year-end as part of longer-term company planning.
What happens to your Corporation Tax return?
This is where changing your accounting year-end can make things slightly more complicated.
Your company’s statutory accounts and its Corporation Tax accounting period are closely related, but they are not governed by exactly the same rules.
A Corporation Tax accounting period cannot be longer than 12 months.
If you extend your company’s financial year so that the accounts cover more than 12 months, you will therefore normally have to submit two Company Tax Returns covering the longer period.
For example, if you extend a 12-month financial year by three months, your statutory accounts may cover 15 months. For Corporation Tax purposes, the period must be split because an individual Corporation Tax accounting period cannot exceed 12 months.
HMRC explains the rules in its guidance on Corporation Tax accounting periods.
For more information on how Corporation Tax works generally, read our Corporation Tax guide for contractors.
Does changing your year-end change your filing deadline?
A private limited company would normally have nine months from the end of its accounting period to file its annual accounts with Companies House.
Changing the accounting reference date changes the period covered by the accounts and can therefore change the filing deadline.
There is an important rule when you shorten an accounting period. The new deadline will generally be the later of:
- nine months from the new accounting reference date; or
- three months from the date Companies House receives notice of the change.
Don’t assume that changing your year-end automatically gives you extra time to file overdue accounts. Companies House specifically prevents you from changing the accounting reference date once the accounts for that period are already overdue.
For more information on the dates you need to keep track of, read our guide to limited company tax and accounting deadlines.
Do you need to tell HMRC?
Changing the date at Companies House does not remove your Corporation Tax obligations.
If changing your financial year also requires your Corporation Tax accounting period to change, make sure HMRC has the correct dates.
This is particularly important if you extend your accounts beyond 12 months. HMRC says you should contact it to update the accounting period dates before the original Company Tax Return filing date.
Your accountant will normally handle the Corporation Tax returns and ensure the correct accounting periods are used.
Is it worth changing your year-end?
For most contractors with a straightforward limited company, there is no reason to change an accounting year-end which is already working perfectly well.
But there can be good reasons to do it.
You might prefer your accounts to align more closely with the tax year, want several companies to use the same date, or have a practical or commercial reason to shorten or extend the current accounting period.
The important thing is to consider the knock-on effects before making the change. A different year-end can alter your accounts filing timetable and, if you extend the period beyond 12 months, create an additional Corporation Tax return.
If you are looking for an accountant who specialises in limited company contractors, take a look at our contractor accountant directory.