Choosing your accounting year end

Last reviewed: 29 September 2026 · Reviewed by IFM's qualified accountant

There is no universally best month. A 31 March year end may feel familiar because it is close to the UK tax year, while 31 December matches the calendar year. Neither choice is inherently more tax-efficient. The right date depends on the company's trading cycle, group reporting, stock counts, information needs and the time available to prepare accounts and tax returns.

What accounting year end does Companies House set?

When a company is incorporated, Companies House assigns an accounting reference date, often called the ARD. GOV.UK says it is normally the last day of the month in which the first anniversary of incorporation falls.

For example, a company incorporated on 12 September would normally receive a 30 September accounting reference date. Its first accounts would usually cover the period from incorporation to that date in the following year. That first accounting period can therefore be slightly longer than 12 months.

Do not calculate the deadline from an example alone. Check the company's live Companies House record and filing reminder. First accounts are normally due 21 months after incorporation for a private company. Later annual accounts are normally due nine months after the accounting reference date. Different rules can apply after a change of date, to public companies or where Companies House grants an extension.

Use the Deadline Finder for standard first accounts, first confirmation statement and Corporation Tax dates. For VAT, payroll, personal tax and other obligations, check the tax deadlines calendar and your official records.

When should you keep the automatic date?

Keeping the assigned date avoids an additional filing and is often sensible where the business is straightforward. The first period will normally be close to one year, the official register already reflects it and advisers can plan around it.

A small service company without seasonal peaks may gain little from changing the date. Simplicity has value: owners and staff do not need to remember why the statutory year differs from the original cycle, and there is less scope for confusing an old date with the current one.

Before leaving it unchanged, consider whether the date falls during the company's busiest month. Accounts preparation requires reconciliations, explanations and decisions even when an adviser does most of the technical work. A year end that repeatedly coincides with peak trading can make good records harder to achieve.

Should a company align its year end with the tax year?

Some owners choose 31 March because it is close to the 5 April end of the UK tax year. This can make personal and company planning feel more coherent, particularly where the owner also has self-employment, property or investment information.

However, a limited company is a separate legal person. Its Corporation Tax accounting periods and the directors' personal tax positions are not made identical merely by choosing 31 March. Salary, dividends and benefits are taxed under rules that need their own dates and evidence.

Choose 31 March for administrative clarity if it helps, not because the date by itself guarantees a saving. Tax outcomes depend on profits, rates, distributions, reliefs and timing rules in force for the relevant periods.

Should the year end match a group or investor?

If a company belongs to a group, matching the parent company's reporting date can simplify consolidation, intercompany reconciliations and performance reporting. An investor, lender or franchise agreement may also require information to a particular date.

Ask for the reporting requirement before changing the statutory year. Management accounts can sometimes satisfy a stakeholder without moving the Companies House date. Conversely, maintaining different statutory and group calendars may create avoidable work every year.

Where an overseas parent is involved, consider the practical effect of different currencies, standards and filing timetables. This is an area for tailored accounting and legal advice, particularly if the proposed period would be unusually long or short.

How do seasonality and stock affect the choice?

The best year end is often shortly after a quieter trading period, when records are complete and staff can help with questions. A retailer may avoid a date in the Christmas rush. A seasonal tourism business may prefer the end of its quieter season. A business holding material stock should choose a date when a reliable physical count is feasible.

There is a trade-off. A low-stock date can simplify valuation, but a quiet month may also have unusual cash or supplier balances. Select the date that produces representative information and can be supported by sound evidence.

Think about the people involved. Who closes the ledger, counts stock, confirms work in progress, obtains statements and answers the accountant? A theoretically neat date is a poor choice if the responsible staff are unavailable every year.

How does the year end affect cash flow and filing dates?

Changing the year end changes the period covered by the statutory accounts and may affect when Corporation Tax information and payments fall due. It does not remove tax already arising, and a long accounting period may need to be split into more than one Corporation Tax accounting period because a Corporation Tax accounting period cannot normally exceed 12 months.

That can mean two Company Tax Returns for one set of statutory accounts. It can also affect instalment-payment analysis for larger companies or the timing of relief claims. Do not change a date solely to postpone a payment without checking the full consequences.

Work backwards from the operational close, accounts preparation, board approval, tax computation and statutory filing. The legal deadline is the final boundary, not the target date for starting the work.

How can a company change its accounting reference date?

A company changes its accounting reference date by filing the appropriate notice with Companies House. GOV.UK provides an online service and a paper form. The notice must normally be filed before the accounts for the current period are due.

An accounting period can be shortened as often as needed. It can normally be lengthened only once in five years and cannot usually be extended beyond 18 months. GOV.UK lists exceptions, including some cases involving administration or alignment with a parent undertaking.

These limits are important. If an 18-month maximum or five-year rule affects the plan, do not assume an exception applies. Read the current guidance and obtain advice before filing.

After the change is accepted, update every internal schedule. Replace calendar reminders, tell the accountant and payroll or tax contacts, amend group reporting instructions and check the new Companies House due date. Retain the filing acknowledgement.

How do first-year accounts interact with Corporation Tax?

A newly incorporated company can be registered before it starts trading. Companies House and HMRC periods do not always begin and end in the same way. The statutory accounts start from incorporation, while the Corporation Tax accounting period generally begins when the company becomes active for Corporation Tax purposes.

If statutory accounts cover more than 12 months, HMRC will generally require two Company Tax Returns because a Corporation Tax accounting period cannot be longer than 12 months. The figures must be apportioned or allocated correctly between the periods.

Tell HMRC when the company becomes active and make sure its records reflect any change to the accounting date. Do not treat Companies House acceptance as proof that every HMRC record has updated correctly.

Which questions help you choose the date?

Ask five practical questions:

When is the business least operationally stretched?
When can stock, work in progress and accrued income be measured reliably?
Does a parent, lender or investor require a particular reporting date?
Will the proposed period create more than one Corporation Tax return or other additional work?
Can the change be filed within the Companies House limits and before the current accounts are due?

Document the reason for the decision. A short board minute can explain why the date supports the company's reporting and governance. This is particularly helpful if the date changes again or new directors later ask why it was chosen.

What should you do after deciding?

Confirm the accepted accounting reference date on the public register. Build a timetable for bookkeeping close, year-end evidence, draft accounts, director approval, Corporation Tax work and Companies House filing. Allow time for questions and corrections.

If no strong reason points elsewhere, keeping the automatic date is a reasonable default. A change should make reporting materially easier or align a genuine requirement; it should not add complexity for cosmetic neatness.

For help planning statutory records and filings, see the limited company accounts service and company formation and secretarial service.

What should you read next?

What do people also ask about this topic?

What is the best accounting year end for a limited company?

There is no universally best date. Choose a period end that allows reliable stock, work-in-progress and bookkeeping records, avoids the busiest operational period and meets group or lender needs. Tax consequences depend on the company’s figures and timing, not simply the month chosen.

Can I change my company’s accounting year end?

Usually, yes. A company can change the current or immediately previous accounting reference date before the accounts are overdue. Shortening is permitted more often than lengthening. Check the new filing deadline before submitting because a change can make the deadline earlier.

How long can a company accounting period be?

Companies House normally permits a financial year to be lengthened to a maximum of 18 months, usually once every five years unless an exception applies. A Corporation Tax accounting period cannot exceed 12 months, so longer statutory accounts can require two Company Tax Returns.

Is 31 March the best year end for tax?

A 31 March year end can feel convenient because it is close to the UK tax year, but it does not automatically reduce tax. A company is separate from its directors. Rates, profits, distributions, reliefs and payment timing determine the result.

Which official sources support this guide?

General guidance, not advice for your situation.