Accounting Periods for Corporation Tax: Everything UK Companies Need to Know
Your company’s accounting period is the foundation of its corporate tax obligations. It determines which tax rates apply, when payment is due, and when your CT600 must be filed. Yet many directors are unclear on how their accounting period is set, what happens if it doesn’t align with the calendar year, or how a short period affects their tax rate thresholds.
This guide from CIGMA Accounting explains accounting periods for Corporation Tax from first principles covering the rules, the exceptions, and the practical implications for your business.
What Is a Corporation Tax Accounting Period?
A Corporation Tax accounting period is the time span for which your company prepares its accounts and calculates its Corporation Tax liability. It is distinct from, but usually aligned with, your company’s financial year also called the trading year or accounting reference period at Companies House.
Key Rule
An accounting period for Corporation Tax purposes cannot exceed 12 months. If your company’s financial year is longer than 12 months, it must be split into two separate accounting periods for Corporation Tax.
How Is the Accounting Period Set?
When you form a company, Companies House sets an Accounting Reference Date (ARD) the last day of your annual accounting period. By default, this is the last day of the month in which your company was incorporated, set one year later.
Example: A company incorporated on 15 September 2024 would have a default ARD of 30 September 2025.
You can change your ARD, subject to Companies House rules. Your accounting period for Corporation Tax usually starts on the day the company starts trading or incorporates if earlier and ends on the ARD.
The First Year: Short Accounting Periods
In a company’s first year of trading, the accounting period is often shorter than 12 months from the date of incorporation or trading start to the first ARD. This short period has two important tax implications:
- The Corporation Tax rate thresholds (£50,000 and £250,000) are reduced proportionally
- Payment and filing deadlines are calculated from the end of this shorter period
Example: A company starts trading on 1 October 2024 and has a 30 June 2025 year-end a 9-month accounting period. The small profits rate threshold reduces to £37,500 (£50,000 × 9/12) and the upper limit to £187,500 (£250,000 × 9/12).
Long Periods: When Your Financial Year Exceeds 12 Months
If your company prepares accounts covering more than 12 months common when changing your ARD, the period must be split into:
- First 12 months treated as one Corporation Tax accounting period
- The remainder treated as a second, shorter accounting period
Each period has its own Corporation Tax computation, its own rate assessment, and its own filing and payment deadlines. This can create administrative complexity an area where professional accounting support pays for itself.
Dormant Companies: Do They Have Accounting Periods?
Yes. Even if a company is dormant not trading, it still has a Companies House accounting reference period and may have a Corporation Tax accounting period. Dormant companies must still file annual accounts with Companies House dormant accounts rather than full accounts and a Confirmation Statement. They should also notify HMRC of their dormant status.
How Your Accounting Period Affects Your Tax Deadlines
Both key Corporation Tax deadlines are tied to the end of your accounting period:
Deadline Summary
Corporation Tax Payment: 9 months and 1 day after the end of the accounting period
CT600 Filing: 12 months after the end of the accounting period
Note: These are different deadlines. The payment deadline always falls before the filing deadline.
How to Find Your Accounting Period
You can confirm your company’s accounting period by:
- Checking your company’s annual accounts the period covered is stated on the first page
- Visiting Companies House and viewing your company’s filing history
- Contacting your accountant they will have this on file
- Checking your HMRC online account your CT accounting period is shown in your Corporation Tax record
Can You Change Your Accounting Period?
Yes, subject to rules. You can change your ARD at Companies House, which will alter your accounting period. However, you cannot shorten an accounting period to less than one month, and you can generally only extend it once in a five-year period with exceptions. Any change should be considered carefully for its tax implications.
Ensure Your Corporation Tax Periods Are Correctly Defined
At Cigma Accounting, we help businesses across London understand how corporation tax accounting periods work so they can meet filing and payment obligations accurately. From Hammersmith, including Avonmore Road and Kensington High Street, many companies are unsure how accounting periods align with financial years and tax returns, which is why our guidance focuses on making these rules clear and manageable in practice.
Getting your accounting periods right is essential for avoiding missed deadlines, incorrect filings, and potential HMRC penalties. With physical offices across London, we support businesses in structuring their reporting correctly, ensuring all submissions are aligned with HMRC requirements and completed on time.
Frequently Asked Questions
What is an accounting period for corporation tax?
An accounting period for corporation tax is the timeframe used to calculate a company’s taxable profits. It usually aligns with the company’s financial year but can differ in certain situations, such as when a company starts trading or changes its accounting date.
How long is a corporation tax accounting period?
A corporation tax accounting period can be up to 12 months long. If company accounts cover a longer period, they must be split into separate accounting periods for tax purposes, each requiring its own corporation tax calculation.
When does a corporation tax accounting period start and end?
An accounting period typically starts when a company begins trading or becomes liable for corporation tax and ends 12 months later or when the accounting date changes. It can also end early if the company stops trading or goes into liquidation.
Can a company have more than one accounting period?
Yes, a company can have multiple accounting periods within a year if its accounts exceed 12 months or if there are changes such as a new accounting date. Each period must be reported separately to HMRC.
How do accounting periods affect corporation tax deadlines?
Corporation tax deadlines are based on the accounting period. Tax payment is due 9 months and 1 day after the end of the period, while the CT600 return must be filed within 12 months. Accurate period tracking is essential for compliance.
What happens if you change your accounting period?
If you change your accounting period, your tax periods may need to be split or adjusted. This can affect filing deadlines and tax calculations, so it’s important to notify HMRC and ensure all reporting remains accurate.
Need Help Managing Your Corporation Tax Accounting Periods?
Understanding how accounting periods affect your tax returns can be challenging, especially when dealing with multiple filings or changes in your business structure. Our team at Cigma Accounting provides clear, practical support to help you stay compliant and organised.
