Change your accounting date

If you are self-employed, in a partnership, a limited liability partnership (LLP) or a director of a limited company, your business must keep adequate accounts or financial records.

These records allow limited companies and LLPs to prepare annual accounts which report on the performance and activities of the company or LLP during the financial year. The financial year is usually a 12 month period for which you prepare accounts, determined with reference to an ‘accounting reference date’ (ARD). The information is used by HM Revenue & Customs to work out your tax. Limited companies and LLPs must also file their accounts with Companies House each year.

Sole traders and partners will use those financial records to complete their income tax self assessment.

You may wish to change your ARD:

  • to bring your financial reporting into line with the tax year to simplify self-employment tax calculations
  • to bring your financial reporting into line with other businesses in your group
  • to bring it in line with commercial or seasonal factors relating to your trade
  • to give you more time in which to prepare your accounts

This guide explains how your first ARD is set. It also tells you how you can change your accounting date and the implications of doing so.



Accounts and accounting periods for limited companies and limited liability partnerships

Every limited company or limited liability partnership (LLP) must prepare annual accounts that report on its performance and activities during the year. The accounts must include a balance sheet, a profit and loss account and certain other information.

The period reported on in the accounts is called the accounting reference period or financial year. Among other uses, the accounts are used by HM Revenue & Customs to work out tax due or owed.

Accounting periods for existing businesses

The date on which the financial year ends, called the accounting date or accounting reference date, is normally 12 months after the previous accounting date. Your company can use a date seven days either side of this date if this is more convenient.

Accounting periods for new businesses

For new companies or LLPs the accounting period starts on the day of incorporationnot the first day of trading, and ends on the last day of the month in which the anniversary of incorporation falls (or seven days either side of this if this is more convenient).

For example, if a company was incorporated on 10 June 2009 its accounting date would be set at 30 June, and the first accounts would cover a period from 10 June 2009 to 30 June 2010 – or up to seven days either side of that date if this is more convenient.

You can get regular reminders of important tax dates with our Tax deadline email alerts.


Change a company or limited liability partnership’s accounting reference date

A company or limited liability partnership (LLP) can register to change its accounting reference date (ARD), provided the relevant accounts are not already overdue. Private companies have nine months after the ARD in which to send their accounts to Companies House, or 21 months from date of incorporation if the first accounts cover more than 12 months.

You can shorten an accounting reference period as often as you like and by as many months as you like.

When a company shortens its accounting period, the new filing deadline will be the longer of:

  • nine months for a private company (or six months for a public company) from the new ARD
  • three months from the date of receipt of the notice

For additional information on changing your ARD, see the guidance notes on ARDs on the Companies House website – Opens in a new window.

How to make the change

Complete form AA01 online via WebFiling and submit to Companies House – see our guide on how to use WebFiling to file company information online.

Alternatively, you can complete a paper form AA01 or LL AA01 for LLPs and then return it to Companies House by post. Remember that you cannot request a change if your accounts are already overdue. Find form AA01 to change your company’s ARD on the Companies House website – Opens in a new window.

Effect on tax return date

For guidance on when you must deliver your Company Tax Return following a change in ARD, see the page on changing your Corporation Tax accounting period in our guide on changing your business details for Corporation Tax.

In an LLP, a change of accounting date may affect individual members’ returns. For more information on tax in an LLP, see our guide on how to set up and register a limited liability partnership (LLP).


Accounts and accounting periods for sole traders and partners

If you are a sole trader or partner, you can choose not to prepare formal accounts, but you still need to keep records of income and expenditure over a set accounting period. You must include this information on your self-assessment tax return, so that HM Revenue & Customs (HMRC) can work out your tax.

Accounting periods and basis periods

The accounting period starts on the day you started trading or became a partner and can end on any date – called the accounting date – that suits your business. It then normally runs for 12 months from the last accounting date.

Unless you start trading exactly 12 months from when you want your accounting period to end, your first few accounting periods may be shorter or longer than 12 months. For example, if you started trading on 1 March, you may decide to have your first accounts made up over seven months to 30 September, and then 12 monthly thereafter.

However, your tax will normally be based on the profits for a 12-month basis period, even if your accounting period is shorter or longer than 12 months. For more information, download helpsheet 222 on accounting periods and business profits from the HMRC website [opens in a new window].

Many businesses find it easiest to end their accounts on 5 April, in line with the end of the self-assessment year.


Change the accounting period for sole traders and partnerships

If you are a sole trader you can change your accounting date for tax purposes by notifying your tax inspector in your self assessment return. You will have to give reasons for the change. You will also need to send back your return by the required filing date – if it arrives late, HM Revenue & Customs (HMRC) will assess your tax on the previous basis period.

A change of accounting date can result in you being taxed twice for the same period, due to an ‘overlap’ of basis periods. If this happens, you need to keep a record of the overlap period and profits and claim relief at a later date.

Download information about accounting dates and business profits from the HMRC website [opens in a new window].

Partnerships

A partnership normally completes a partnership tax return for the accounting period ending in that tax year. If you change your accounting date so that more than one accounting period ends during the tax year, you must complete additional tax return pages for each accounting period.

If a change of accounting date means that there is no accounting date for a partnership in a given tax year, the partnership will have to estimate its taxable profits for that year. If the estimate turns out to be too low, the partners could be charged interest.

Read guidance on completing your tax return for partners and partnerships on the HMRC website- Opens in a new window.

Every effort has been made by the author(s) to ensure this article’s accuracy but it does not constitute legal advice tailored to your circumstances. If you act on it, you acknowledge that you do so at your own risk. We cannot assume responsibility and do not accept liability for any damage or loss which may arise as a result of your reliance upon it.