Change in Accounting Period

Company’s financial year normally runs for the time period of 12 months but you can change it as per your choice and make it more or less than 12 months. It is also known as “Accounting reference date”. Your company can only make changes to the current financial year or the immediate previous year. Getting changes to your company’s year-end will also result in changes to deadline for filing accounts unless you’re lengthening your first financial year of the company.

When Does the Year End for Taxes

• The UK tax year runs from 6 April to 5 April the following year for individuals and businesses.

• A company’s financial year end in the UK is usually its accounting reference date (ARD), which can be any date but often aligns with the tax year for simplicity.

• Many businesses choose to change their company year end to 31 March or 5 April to match the tax year, simplifying tax reporting and calculations.

• Knowing when does the year end for taxes helps plan accounting periods and tax payments, reducing complexity and avoiding overlapping profits or transitional rules.

Financial Year End in UK

The financial year end in the UK for companies is known as the accounting reference date (ARD). It is usually set as the last day of the month in which the company was incorporated. Companies can apply to change this date to better suit their business needs.

Changing the financial year-end can result in a longer or shorter accounting period, but there are rules:

• You can shorten your financial year as often as you like (minimum one day).

• You can lengthen it up to 18 months, but only once every five years unless special permission is granted.

• Changing the year-end affects your filing deadlines and tax accounting periods.

Change of Company Year End

To change your company year end, you must notify Companies House by filing form AA01 either online or by post. This change can only be made for the current or immediately preceding financial year and cannot be done if accounts are overdue.

Key rules include:

• You can shorten your accounting period multiple times.

• You can only lengthen your accounting period once every five years unless under special circumstances (e.g., administration, alignment with group companies).

• Changing your year end will also change your Corporation Tax accounting period, so you must inform HMRC to avoid penalties.

Extend Filing Deadline and Extend Companies House Filing Deadline

Changing your company’s accounting period or year-end can extend the deadline for filing annual accounts with Companies House.

When you update your year-end before your accounts are due, the Companies House filing deadline is automatically adjusted, giving you extra time to prepare and submit your accounts.

This extension only applies if your accounts are not already overdue.

Typically, accounts must be filed within nine months of the financial year-end, so changing your year-end can help you better manage this deadline.

For tax purposes, changing your accounting period may also affect Corporation Tax return deadlines, so you must inform HMRC to update these accordingly.

Applying online via Companies house service

The easiest way by which you can change your company’s financial year is by way of applying it online through Companies house. In case you have done any change in your limited company, you must notify it to Companies house which includes –

1. Change in the personal details of directors and company secretaries.

2. New appointment or resignation of directors and company secretaries.

3. Change in name of the company.

4. Change in registered office address of the company.

5. Change in accounting reference date.

6. Change in Company’s share structure such as issue of new shares.

7. Change in the place you keep your company records (if different from registered office address).

8. Details about Records you keep at an alternative address.

9. Changes to information related to “People with significant control”.

10. Details of any mortgages – new or paid off.

Also See: Reporting changes to Companies House

What you must have to apply online?

1. You must have a valid e-mail address and password in order to sign up for the Companies house service online.

2. Authentication code sent to you by Companies house.

In case you didn’t used this service before

If you are a first time user and didn’t need used this service before, give a valid e-mail address and create a new password to sign up for this service online. After signing up, one authentication code will be sent by Companies house to your registered office address.

When the changes take effect?

Changes to your address can only take effect officially when it gets registered at Companies house. Changes made to the Company’s name will also take effect, when you register it with Companies house. After registration, new certificate with the company name will be issued to you along with the date of registration.

Applying by post

In case you want to apply for change in accounting period through post, you just need to fill an application form and send it to the address given on the form.

Changing Company’s corporation tax accounting period

When you change your company’s year-end at Company’s house, it generally affects accounting period of your company for corporation tax. Shortening or lengthening of your financial year decides what you need to do further.

Accounting periods for corporation tax

The time covered by your company tax return is the accounting period for Corporation tax. Normally, the accounting period is of 12 months i.e. same as financial year. It might be different in the year of Company’s incorporation. Deadlines for the payment of corporation tax and filing company tax return also get affected by the accounting period.

Check your accounting period

In order to check the date of your accounting period, sign into your HMRC’s business tax account via online with your government gateway user ID and password.

Your first accounting period

When you register your company for corporation tax, HMRC sent you a letter containing dates of your accounting period. In case you found that the dates provided are wrong, kindly contact HMRC immediately.

Also See: How to Pay Companies House Late Filing Penalties?

In case you’re accounting period and financial year are different

A situation may appear when your accounting period is different from the financial year. It may be different in the following circumstances –

1. In the first year of your business

2. At the time of business restart

3. If you stop business trading and become dormant.

Like the above mentioned points, accounting period can differ from your financial year in the following situations –

1. When your accounts cover more than 12 months because of your lengthening of the company year.

2. When your accounts cover less than 12 months because of your shortening of the company year or closing of the company.

If your accounts cover more than 12 months

In case your accounts cover more than 12 months, you need to file 2 returns as normally the accounting period cannot be longer than that of 12 months.

If your accounts cover less than 12 months

Normally, an accounting period ends after 12 months but it can be shorter than 12 months too. In case you are filing your company tax return by using HMRC’s online service, contact HMRC and update your dates of accounting period before filing tax return whereas if you are filing returns through accounting software, you must enter the new dates into the software and update the accounting period before filing tax return.

Basis Period Reform: Moving to a 31 March Year-End

Recent reforms to the basis period for sole traders and partnerships mean many are considering moving their accounting year-end to 31 March or 5 April. This change matches your accounting period with the tax year, making tax calculations easier and avoiding extra complications.

Benefits of moving to a 31 March year-end include:

• Avoiding overlap profits and transitional rules.

• Simplifying tax reporting and filing.

• Allowing the longest possible time between year-end and tax filing deadlines (up to 10 months).

However, businesses should consider practical issues such as seasonal trading patterns, audit schedules, and administrative changes before making this move.

Practical Considerations and Timing Issues When Changing Year-End

Changing your company’s year-end is not just a paperwork exercise; it requires careful planning:

• Consider your business’s busiest periods to avoid operational disruption during year-end accounting.

• Understand how changing the year-end affects tax payments and cash flow.

• Be aware that extending your accounting period beyond 12 months is limited and subject to rules.

• Notify all relevant authorities (Companies House, HMRC, VAT office if applicable).

• Align your VAT reporting periods if necessary to match the new accounting period.

In case you want more information or advice on Change in Accounting period, kindly call us on 03330886686 or you can also e-mail us at enquiry@dnsaccountants.co.uk

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