Can you change your company’s year end?
The short answer is yes you can change your company’s year end. However, you can only change your company’s year-end for your company’s current financial year or the one immediately before it.
You can change your company’s year end (also known as its ‘accounting reference date’) to make your company’s financial year run for more or less than 12 months.
There are some rules around it though.
Changing your company’s year end will also change your deadline for filing accounts, unless you’re lengthening your company’s first financial year.
There are special rules in place which limit the ability to change a company’s year end date. A company’s year-end date is also known as its ‘accounting reference date’ and is usually set by reference to the date the company was incorporated.
According to Gov.uk the rules are:
You can shorten your company’s financial year as many times as you like – the minimum period you can shorten it by is 1 day.
You can lengthen your company’s financial year:
- to a maximum of 18 months, or longer if your company’s in administration
- once every 5 years
You can only lengthen the financial year more often than every 5 years if:
- the company is in administration
- you’re aligning dates with a subsidiary or parent company
- you have special permission from Companies House
Are the benefits to changing my company’s year end date?
Generally speaking, most companies tend to change their year-end to fall in line with a specific date, the most common year end dates are usually 31st December (the end of the year) or 31st March (to coincide with the end of the tax year).
In some cases, where companies have made a profit in the most recently completed period, there are likely to be tax liabilities. Through extending your accounting period, you can bring the loss-making phase into the same term as that with profits.
Small businesses and sole traders can experience benefits to cash flow through changing the accounting period, although this will have been affected to some extent by the Government’s deferral of self-assessment payments last year.
What if I’m a new company?
For new companies, the first accounting reference date is fixed as the last day in the month in which its first anniversary falls.
How do I change it?
A request for a change to an accounting reference date can be made online using the Companies House online service or by using a postal version of the Change your company accounting reference date (AA01) form. No change can be made to a period for which accounts are overdue.
Planning note:
There is no overriding reason for using one date over another but there are a number of important factors to consider. These are:
- The date you choose will affect when your tax is due
- You will have to pay tax on your profits if you choose an early date (like January, February for example)
- End of year accounts can be time consuming, so perhaps stay away from months in which your business is at its busiest (Christmas, Summer etc).
Still have further questions? We can help.
We would be happy to review your year-end date to help ascertain if another date would be more beneficial.
