Why Your Year End Date Matters
Your company's accounting year end date directly affects how your CT600 is calculated. Choose 31 March and the tax calculation is straightforward. Choose any other date and your profit gets split across two financial years with potentially different rates.
The Simple Case: 31 March Year End
If your accounting period runs from 1 April to 31 March, your entire profit falls within a single HMRC financial year. The calculation is simple:
Profit × Tax Rate = Corporation Tax
No splitting, no apportionment, no complications. This is why many accountants recommend aligning your year end to 31 March.
What Happens with Other Year End Dates
HMRC's financial year runs 1 April to 31 March. If your accounting period crosses this boundary, your profit must be split between two financial years.
Example: Year end 31 December 2025
Your 12-month period (1 January 2025 to 31 December 2025) spans:
- FY2024 (1 April 2024 to 31 March 2025): 90 days in your period
- FY2025 (1 April 2025 to 31 March 2026): 275 days in your period
Profit is split by days:
FY2024 profit = Total profit × (90 / 365)
FY2025 profit = Total profit × (275 / 365)
Each portion is taxed at that financial year's rates. If rates change between financial years (as they did in April 2023), this matters.
When Splitting Matters Most
Rate Changes
The big rate change was April 2023: from a flat 19% to the current 19%/25% system with marginal relief. If your period straddled that date, the split made a real difference.
For 2024-25, the rates are the same in both FY2024 and FY2025, so splitting is purely mechanical — the end result is the same. But rates could change again in any future Budget.
Marginal Relief Thresholds
Even when rates are the same, the marginal relief thresholds are prorated by the number of days in each financial year. This can affect the relief calculation.
For a 31 March year end: thresholds are £50,000 and £250,000 (full year). For a 31 December year end: thresholds are prorated for each FY portion.
Should I Change My Year End to 31 March?
Advantages of 31 March
- Simpler tax calculation (single FY)
- Aligns with HMRC's financial year
- Easier to follow HMRC guidance (examples use 31 March)
- No apportionment needed
Advantages of Other Dates
- 31 December: Matches calendar year, simpler for international business
- Company anniversary: Some directors prefer their incorporation date
- Seasonal alignment: Retailers might prefer January (after Christmas)
How to Change
You can change your accounting reference date at Companies House. You can:
- Extend your accounting period (up to 18 months, once every 5 years)
- Shorten your accounting period (as many times as you like)
File a form AA01 with Companies House. The change takes effect for the current period.
Ivan's approach: If you have multiple companies with different year ends, filing short-period CT600s to sync them all to 31 March simplifies future administration.
Short Accounting Periods
If your period is shorter than 12 months (e.g., when changing your year end), the marginal relief thresholds are prorated:
Adjusted lower limit = £50,000 × (days in period / 365)
Adjusted upper limit = £250,000 × (days in period / 365)
A 6-month period has thresholds of £25,000 and £125,000.
First Accounting Period
Your company's first accounting period starts on incorporation and can be up to 18 months. After that, periods must be 12 months or shorter.
If your first period is longer than 12 months, you'll need to file two CT600s: one for the first 12 months, and one for the remainder.
How Taxpipe Handles This
Taxpipe automatically:
- Detects whether your period spans two financial years
- Splits profit by days
- Prorates thresholds
- Calculates marginal relief separately for each FY
- Handles leap years correctly (HMRC is picky about this)
You just enter your period dates and profit. The software does the rest.