What is a financial year?
A financial year is the 12-month period a business uses for its accounts, which for a UK company ends on its chosen accounting reference date.
What a financial year means
The phrase is used in three ways in the UK, which causes some confusion:
- A company's financial year: the period its accounts cover, ending on its accounting reference date. When a company is incorporated, Companies House sets this as the last day of the month in which the anniversary of incorporation falls. The company can change it.
- The Corporation Tax financial year: runs from 1 April to 31 March and is named after the year it starts. Financial year 2026 runs from 1 April 2026 to 31 March 2027. Corporation Tax rates are set for each of these years.
- The government's financial year: also 1 April to 31 March, used for public spending.
Example
A company is incorporated on 14 August 2025. Its accounting reference date becomes 31 August.
| Item | Date |
|---|---|
| First accounts cover | 14 August 2025 to 31 August 2026 |
| First Corporation Tax period | 14 August 2025 to 13 August 2026 |
| Second Corporation Tax period | 14 August 2026 to 31 August 2026 |
| First accounts due at Companies House | 14 May 2027 (21 months after incorporation) |
Because the first accounts run for more than twelve months, they are split into two accounting periods for Corporation Tax, each with its own return and payment date.
Why it matters for your business
You can choose a financial year that suits you. A seasonal business may prefer a year end after its busy period, when stock is low and there is time to deal with the accounts. Others align with the tax year, or with a parent company. You can shorten a company's financial year as often as needed, but extending it is normally allowed only once every five years, and a period cannot exceed 18 months. The change is made at Companies House on form AA01. Cloudkeepers can advise on a sensible year end before you change it.
Financial year vs tax year
Individuals use the tax year, which runs from 6 April to 5 April. Companies use their own financial year for accounts, and the 1 April Corporation Tax year for rates.
Common questions
Yes, by changing the accounting reference date with Companies House, using form AA01 or the online service. The change must be made before the filing deadline for the period you are changing. Shortening is allowed freely; extending is limited to once in five years, up to a maximum of 18 months.
No. A company can choose any year end. 31 March is popular because it lines up with the Corporation Tax financial year and is close to the personal tax year, but many companies keep the date set at incorporation or choose one that suits their trading cycle.