What Happens If Your Accounting Period Is Longer Than 12 Months?

Your Companies House accounts can cover up to 18 months, but HMRC has a strict rule: no Corporation Tax accounting period can exceed 12 months. If your financial year is longer than 12 months, HMRC automatically splits it into two periods — and you must file a separate CT600 for each one.

This catches out many first-time directors. Here's exactly how it works and what you need to do.

Why would your accounting period be longer than 12 months?

There are three common scenarios:

1. First year of a new company

When you incorporate a limited company, Companies House sets your first accounting reference date (ARD). Your first set of accounts can cover up to 18 months from incorporation.

Example: Company incorporated on 1 July 2024 with a year-end of 31 March. The first Companies House accounts cover 1 July 2024 to 31 March 2026 — that's 21 months, but Companies House allows the first accounts to be up to 18 months. So you'd likely choose 31 March 2026 (9 months) or keep the default and adjust.

More commonly, a company incorporated on 15 November 2024 with a 31 March year-end would have first accounts running from 15 November 2024 to 31 March 2026 — approximately 16.5 months.

2. Changing your year-end date

If you extend your accounting reference date at Companies House, your accounts might cover more than 12 months. For example, changing your year-end from 31 December to 31 March creates a 15-month period.

3. Restoring a struck-off company

If your company was struck off and then restored, you may have a long period of dormancy that creates an extended accounting period.

How HMRC splits the period

HMRC's rule is simple:

• The first period is always 12 months from the start date
• The second period covers the remainder

Example

Company incorporated 1 October 2024, first Companies House year-end 31 March 2026:

You file two separate CT600 returns with HMRC — one for each period.

Filing deadlines for each CT600

Each CT600 has its own filing and payment deadline:

Using the example above:

Important: The payment deadline for CT600 #1 often arrives before you've finished your first year of trading. Many directors miss this because they assume they have until the Companies House deadline.

How to split profits between the two periods

You need to allocate your income and expenses to each period. There are two approaches:

1. Actual basis (preferred by HMRC)

If you have monthly or quarterly management accounts, allocate actual income and expenses to the months they relate to. This gives the most accurate result.

2. Time-apportionment

If you can't identify actual figures for each period, you can apportion profits on a time basis:

Period 1 profits = Total profits × (12 ÷ total months)

Period 2 profits = Total profits × (remaining months ÷ total months)

Example: 15-month period, total profit £75,000

Note: Capital allowances have their own allocation rules. Annual investment allowance (AIA) is proportionally reduced for short periods. For a 6-month period, your AIA maximum is £500,000 (the full-year £1,000,000 × 6/12).

Corporation Tax rates for each period

Each period is taxed independently. This matters because of marginal relief:

• Small profits rate (19%) — taxable profits up to £50,000
• Main rate (25%) — taxable profits over £250,000
• Marginal relief — profits between £50,000 and £250,000

For short periods, the thresholds are proportionally reduced. A 6-month second period has thresholds of £25,000 and £125,000.

Also divide thresholds by the number of associated companies (including your own).

Example with marginal relief

15-month period, total profit £200,000, no associated companies:

Both periods fall into the marginal relief band, but the effective tax rate differs because the thresholds are scaled down for the shorter period.

What about losses?

If one period makes a loss and the other a profit, you have several options:

• Carry the loss back — offset against profits of the preceding 12 months
• Carry the loss forward — offset against future profits of the same trade
• Group relief — surrender the loss to another group company (if applicable)

You can also offset the loss from period 2 against the profit in period 1 (since period 1 is the preceding period).

Common mistakes with long accounting periods

1. Filing only one CT600 — HMRC expects two returns; filing one will leave an outstanding return and trigger penalties
2. Missing the first payment deadline — it arrives 9 months after the first (split) period ends, which may be well before your Companies House accounts deadline
3. Forgetting to scale AIA and thresholds — the second (short) period has proportionally reduced allowances
4. Not splitting profits properly — using the full profit figure on one return and nil on the other is incorrect
5. Ignoring associated companies — thresholds must be divided, which can push a short period into a different rate band

How to avoid this situation

If you want to keep things simple:

• New companies: Consider shortening your first accounts to align with a year-end date within 12 months of incorporation
• Changing year-end: Shorten rather than extend where possible — a 9-month period only requires one CT600
• Plan ahead: If you must have a long period, keep good monthly records so you can accurately split the figures

Related articles

• Accounting Period Explained for Corporation Tax
• Change Company Accounting Period: CT600 Impact
• First Year Company Corporation Tax Guide
• Corporation Tax Rates 2025–26 and Marginal Relief

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Related Reading

• Filing a CT600 for a Short Accounting Period: Complete Guide
• Filing Your First CT600: A Step-by-Step Guide for New Companies
• Dormant Company CT600 Filing: Do You Still Need to File? (Yes — Here's How)