Understanding accounting periods
What is an Accounting Period?
An accounting period is the timeframe for which you are reporting your company's financial activity. It usually lasts 12 months, aligning with your company's financial year.
Your First Period
Your very first accounting period starts on your date of incorporation. It often lasts slightly longer than 12 months because it runs to the end of the month in which you incorporated, a year later. Because HMRC limits tax returns to exactly 365 days, your first filing usually requires two separate CT600s (a split period).
Subsequent Periods
After your first year, your accounting period will typically be exactly 12 months long, starting the day after the previous period ended.
Long Periods Exceeding 18 Months
If you have extended your accounting period beyond 18 months, you will need to file multiple accounts. Companies House restricts single accounting periods to a maximum of 18 months.
Changing Your Accounting Reference Date (ARD)
You can change your company's financial year-end (ARD) via Companies House. You can shorten your period as many times as you like, but you can generally only lengthen it once every 5 years. If you do this, ensure your dates in WeFile reflect the new, officially accepted dates.
How Periods Relate to Tax
Your Corporation Tax is calculated strictly on the profits made during that specific accounting period. If the official tax rates change partway through your accounting period, your profits will be time-apportioned across the two different tax rates.