What is an accounting period?
An accounting period is the span of time, usually 12 months, that a set of accounts or a tax return covers, ending on the business's year end date.
What an accounting period means
An accounting period is the stretch of time your financial statements cover. For most businesses it is 12 months, ending on the year end date. For a limited company, Companies House sets the first year end (the accounting reference date) as the last day of the month in which the company was incorporated, a year later. You can change it, within limits.
There are actually two overlapping ideas for companies. The period of account is what your statutory accounts cover. The Corporation Tax accounting period is what your tax return covers, and it can never be longer than 12 months. If your first accounts cover 14 months, you file two Corporation Tax returns: one for the first 12 months and one for the remaining two.
Example
Northfield Studio Ltd is incorporated on 10 June 2025. Its first accounts run from 10 June 2025 to 30 June 2026, just over 12 months. Because that is longer than 12 months, there are two Corporation Tax periods: 10 June 2025 to 9 June 2026, and 10 June 2026 to 30 June 2026. From then on, each accounting period runs 1 July to 30 June.
| Deadline | When |
|---|---|
| Corporation Tax payment | 9 months and 1 day after the end of the tax period |
| Accounts to Companies House | 9 months after the year end (21 months after incorporation for first accounts) |
| Company Tax Return (CT600) | 12 months after the end of the tax period |
Why it matters for your business
Every deadline hangs off your accounting period, so knowing exactly when it ends avoids late filing penalties. The choice of year end also matters. Many small businesses keep a 31 March year end to line up with the tax year, which makes director pay and dividend planning simpler. Seasonal businesses often choose a quiet month so stock counts and year-end work do not clash with their busiest period.
Sole traders and partnerships
Since the basis period reform, sole traders and partners are taxed on profits for the tax year itself, 6 April to 5 April. You can still draw up accounts to another date, but the profits are apportioned to the tax year, so a 31 March or 5 April year end is now the simplest choice for most.
Common questions
Yes. You can shorten an accounting period as often as you like, and lengthen it once every five years, up to a maximum of 18 months, by filing form AA01 at Companies House before the filing deadline for the period you are changing.
Often, but not always. Financial year is commonly used to mean the company's accounting period. In tax, the financial year for Corporation Tax rates runs 1 April to 31 March, which is different again from the personal tax year.