A Different Finish Line: Resetting a Company’s Year End Without Tripping Over Corporation Tax in 2026

A company’s year end has a habit of feeling permanent. It is set at incorporation, it appears on every set of accounts, and most directors give it little thought until a bank, an investor or a new parent company asks whether it might be moved. In practice the accounting reference date is changeable, and the mechanism is straightforward. What catches people out is the gap between the Companies House rules and the corporation tax rules, which do not move in step.

Why a year end gets moved

The motives are usually commercial rather than cosmetic. A retailer whose busiest weeks fall in December may prefer a January or February cut-off so that the accounts are prepared when stock and cash positions have settled. A company acquired by a group often has to align with the parent’s reporting calendar. A change of accountant, a refinancing or a first external audit can all prompt a review of whether the current date still suits the rhythm of the business.

None of these are improper. What matters is that the change is planned rather than reactive, because the paperwork is only half the exercise. The other half is the effect on tax.

The Companies House mechanics

A change is made by filing form AA01. It can be submitted online for a modest fee (currently £8, against £24 for the paper form) and the new date must be the last day of a month. The form can be filed before the end of the current accounting period, or afterwards, provided the accounts for that period are not already overdue. A late set of accounts cannot be rescued by moving the date retrospectively.

Two limits do most of the work in practice. First, the maximum length of any single period of account is 18 months, measured from the start of that period. Second, the accounting reference date can only be extended once in a five-year window, and shortened once in a five-year window. Extending an already extended period is not permitted, and a period that has been shortened cannot then be extended within the same window. There are narrow exceptions, such as aligning with a parent undertaking or where an administration order is in force, but they are not a general escape route.

An example makes the arithmetic clearer. A company whose current period of account began on 1 January 2026 and ends on 31 December 2026 could extend to 30 June 2027, producing an 18-month period that sits exactly on the cap. Shortening to 30 September 2026 would instead produce a nine-month period. Both are possible; the consequences differ sharply.

HMRC does not simply follow

Here is the point most directors miss. Companies House will accept an 18-month period of account, but a corporation tax accounting period cannot exceed 12 months. An extended period of account is therefore split into two accounting periods for tax: the first 12 months, and a shorter balance period running to the new year end.

That split is not a technicality. It means two CT600 returns, two sets of computations and two payment dates. Profits are normally apportioned between the periods on a time basis, unless a different apportionment is just and reasonable. For a seasonal trade with highly uneven profits, time apportionment is not always neutral, and a different basis may need to be agreed with HMRC.

Payment dates follow each period separately: corporation tax falls due nine months and one day after the end of each accounting period. An extension that feels like extra breathing room can therefore turn one payment into two, with the first arriving earlier than a director might expect. The quarterly instalment regime, which applies where profits exceed £1.5 million divided by the number of associated companies, can also be triggered or reshaped by the split.

Shortening: the quieter cash-flow effect

Shortening the year end attracts less attention but can be just as consequential. It brings the corporation tax payment forward, brings the filing deadline forward by the same amount, and compresses the period over which reliefs are claimed. The annual investment allowance, for example, is capped per 12-month accounting period; a short period receives a proportionate share of that cap. Research and development claims, loss relief and capital allowance planning all need to be reconsidered against the shorter window.

The good news is that some obligations are untouched. The confirmation statement date is unaffected, payroll runs on the tax year to 5 April, and VAT return periods are set by HMRC registration rather than the accounting reference date. Directors can therefore narrow the planning to statutory accounts, corporation tax and any group reporting that depends on the year end.

A practical sequence

Before filing, pass a board resolution recording the commercial reason for the change and confirming the exact start date of the current period of account. Check the 18-month cap and the five-year rule against the company’s history, including any changes made by a previous owner.

Model the cash-flow effect before committing. Work out each resulting corporation tax payment date, each filing deadline, and the effect on any reliefs or instalment obligations. For an extension, budget for two returns and two payments. For a shortening, budget for both falling sooner.

File AA01 online and retain the acknowledgement. Then update the accounting software so that it does not keep generating the old period end, and notify banks, insurers and any grant or loan provider that relies on periodic reporting. Tell HMRC and the agent preparing the return as well; the department normally picks up the change from Companies House, but its records can lag and the CT600 must reflect the correct periods either way.

Finally, diarise both sets of deadlines. The change is a one-off administrative act, but its consequences run for at least a year, and often for two. Planned properly, moving the year end is a sensible piece of housekeeping. Left unplanned, it is a quiet source of late filings and unexpected tax bills.