Company accounting period vs financial year: what each one means.

The short answer

For most established companies, the dates line up. The accounts cover 12 months, and HMRC taxes the same 12 months. The terms only drift apart in a few situations, and those are the ones that catch people out.

• Your company's financial year. The period your annual accounts cover. Companies House calls it the accounting reference period.
• Year end, or accounting reference date. The last day of that financial year.
• Accounting period for Corporation Tax. The period HMRC taxes. It usually matches your financial year, but it can never be longer than 12 months.
• The Corporation Tax financial year. A fixed year, from 1 April to 31 March, that sets which tax rates apply.
• The tax year. The personal tax year, which ends on 5 April. It matters for your own salary, dividends and Self Assessment, not for the company's accounts.

Your financial year and year end

Companies House sets your first year end automatically. It is the last day of the month in which the first anniversary of incorporation falls. Each later year end falls on the same date every year.

So a company formed on 6 April 2025 gets a first year end of 30 April 2026. Its first accounts run a little over 12 months. After that, each set of accounts covers 1 May to 30 April.

The year end is also called the accounting reference date. You can make up your accounts to that date, or to a date up to 7 days either side of it. Some businesses use this to end on the last Friday of the month, for example.

Your year end controls the Companies House filing deadline. Private companies usually have 9 months after it to file their accounts. Our guide to year end accounts covers what the accounts include and the penalties for filing late.

The accounting period for Corporation Tax

HMRC does not tax "a year" in the abstract. It taxes profits made in an accounting period. HMRC says the accounting period is normally the same as the financial year your annual accounts cover.

The key rule is the 12-month limit. An accounting period cannot be longer than 12 months, though it can be shorter. A new one starts when the company first comes within the charge to Corporation Tax, usually when it starts doing business. After that, each period starts as soon as the last one ends.

HMRC writes to tell you your accounting period dates once Corporation Tax services are added to your business tax account. You can also check them there. If they look wrong, contact HMRC rather than assuming they will sort themselves out.

Your accounting period controls two HMRC deadlines:

• Paying Corporation Tax. Usually due 9 months and one day after the end of the accounting period.
• Filing the Company Tax Return. Due 12 months after the end of the accounting period it covers.

Notice that the payment date falls before the filing date. Our guide on paying your Corporation Tax bill explains how to pay and what happens if you are late.

When your accounts are longer than 12 months

This is where the two systems split. Companies House allows accounts to cover more than 12 months. HMRC does not allow an accounting period of more than 12 months. So one set of accounts can mean two tax returns.

HMRC's manual says the first 12 months will normally be one accounting period. GOV.UK says you must then file 2 returns to cover the accounts, so the months left over form a second, shorter period. Each return has its own payment and filing dates.

This often happens in a company's first year, because the first year end lands at the end of a month, not on the anniversary. It also happens when a company extends its year end.

A worked example

The profit for the whole set of accounts has to be shared between the two periods. That split is part of preparing the tax returns, and it is much easier when the bookkeeping is dated correctly and reconciled to each month end.

The Corporation Tax financial year

There is one more "financial year", and it has nothing to do with your company's dates. Corporation Tax rates are set for financial years that start on 1 April. Financial year 2026 runs from 1 April 2026 to 31 March 2027.

For financial year 2026, the rates are:

• Small profits rate of 19% for profits of £50,000 or less
• Main rate of 25% for profits above £250,000
• Marginal Relief may apply to profits between £50,000 and £250,000

If your accounting period straddles 1 April, HMRC counts how many days fall in each financial year and works out the tax for each part. If the rates are the same in both years, the answer is the same either way. If they change, the split matters.

The £50,000 and £250,000 limits are also reduced in proportion for a short accounting period. They are reduced again if the company has associated companies. So the short second period in the example above has much lower limits than a full year.

The personal tax year is different again

The tax year that ends on 5 April is for individuals. It drives your own Self Assessment, PAYE on your salary, and tax on your dividends. It does not change the company's year end or its accounting periods.

This matters when you plan how to pay yourself. A dividend paid on 5 April and one paid on 6 April fall in different personal tax years, even though both come from the same company year. See our guide to paying yourself a director's salary for more on this.

Changing your year end

You can change your company's year end by telling Companies House. You can change the current year end or the one just before it. The rules are:

• Shortening. You can shorten the financial year as many times as you like, by as little as one day. Companies House guidance says that from 1 April 2028, subject to forthcoming regulations, you will need a business reason to shorten more than once in 5 years.
• Extending. A period can be extended to a maximum of 18 months. You can only extend once every 5 years, with limited exceptions such as administration or lining up with a parent or subsidiary company.
• Timing. The change must be made before the filing deadline for the period you are changing. If the accounts are already overdue, it is too late.

Remember the HMRC side. If you extend your accounts beyond 12 months, you will have two accounting periods and two returns. HMRC says to update your accounting period dates with them before the original filing date. Otherwise a late filing penalty may apply.

Why companies pick a different year end

Some reasons are practical. A seasonal business may want its year end in a quiet month, when stock is low and staff have time to count it. Others line up with a VAT quarter, so the year end and a VAT return share the same cut-off date. A group of companies usually wants every company on the same date.

Whatever you choose, the year end is a hard cut-off. Sales, bills and bank lines must be dated in the right period. Books that are reconciled every month make that cut-off clean. Books that are months behind make it a long job.

Quick checklist

• Find your year end on the Companies House register and note your next accounts deadline
• Check your accounting period dates in your HMRC business tax account
• If your accounts run longer than 12 months, plan for two Corporation Tax returns and two payment dates
• Diary the payment date, which comes before the return deadline
• Keep the personal tax year separate in your head when planning salary and dividends

Unsure about a term? Our bookkeeping glossary explains the jargon in plain English.