Your Company's First Year? Here's Why You Probably Need Two Tax Returns

If you've just set up a limited company, you might be surprised to learn that your very first Corporation Tax filing will almost certainly be two returns, not one. Don't worry — it's simpler than it sounds, and we'll walk you through exactly what to do.

Why two returns?

When you incorporate a company, Companies House sets your accounting reference date to the last day of the month you incorporated in. Unless you happened to incorporate on the last day of a month, your first accounting period will be longer than 12 months.

For example, if you incorporated on 1 January 2024, your first accounts run to 31 January 2025 — that's 13 months.

Here's the catch: HMRC only accepts CT600 returns for periods of up to 12 months. So you need to split your first period into two.

How does the split work?

The first return covers the first 12 months, and the second covers the rest:

There's no gap between them — the second period starts the day after the first one ends.

How do you split the numbers?

You don't need to keep two separate sets of books. You prepare your accounts for the full period (all 13 months), then split the figures between the two returns. For most items, this is a simple time-based split:

Trading profit of £26,000 over 13 months (397 days)?

• Return 1 (366 days): £26,000 × 366 ÷ 397 = £23,970
• Return 2 (31 days): £26,000 × 31 ÷ 397 = £2,030

The same approach applies to most income — trading profits, property income, and interest. The one exception is capital gains (selling assets), which go entirely into whichever period the sale happened in.

What about tax rates and thresholds?

The small profits rate threshold (£50,000) and the main rate threshold (£250,000) are both scaled down for shorter periods. So for your 1-month second return:

• Small profits threshold: £50,000 × 31 ÷ 365 = £4,247
• Main rate threshold: £250,000 × 31 ÷ 365 = £21,233

This means a shorter period doesn't give you a tax advantage — the thresholds shrink proportionally.

Capital allowances

If you've bought equipment, vehicles, or other business assets, the capital allowances are calculated separately for each return:

• Annual Investment Allowance (AIA): Scaled by the period length. Your 1-month return gets roughly one-twelfth of the £1,000,000 annual limit.
• Writing Down Allowance: The 18% rate is also scaled — for 1 month, it's about 1.5%.
• Full expensing (100% relief): This one is not scaled — you get the full amount regardless of period length.

Each asset goes into the return for the period when you bought it.

What about the accounts and tax computation?

Here's an important detail:

• Your accounts (the iXBRL balance sheet and profit & loss) cover the full period — all 13 months. The same accounts are included with both returns.
• Your tax computation is different for each return — it shows how the numbers were split and the tax calculated for that specific period.

Taxpipe generates both the accounts and the computations automatically from the figures you enter.

Filling in the CT600 on Taxpipe — step by step

You'll create two separate returns in Taxpipe. Here's exactly what to enter for each one, using our example of a company incorporated on 1 January 2024 with £26,000 total trading profit and £1,000 bank interest over 13 months.

Return 1 (12 months: 1 Jan 2024 – 31 Dec 2024)

Questionnaire step

Answer the questions based on what happened during this 12-month period. If you earned bank interest, tick "Did your company earn any bank interest or investment income?". If you bought equipment, tick "Did your company buy any equipment, tools, or vehicles for the business?". And so on — only tick what applies to this period.

CT600 step — Company & period

CT600 step — About the return

CT600 step — Income

Split your full-period figures by days. Return 1 covers 366 out of 397 days:

Taxpipe will automatically calculate the remaining boxes from these figures, including:

• Box 165 (net trading profits)
• Box 235 (profits before deductions)
• Box 315 (profits chargeable to Corporation Tax)

CT600 step — Tax calculation

You don't need to calculate the tax yourself — Taxpipe works it out automatically based on the figures you entered, the period length, and the current tax rates. It handles the threshold scaling and marginal relief for you.

Return 2 (1 month: 1 Jan 2025 – 31 Jan 2025)

Create a second return in Taxpipe and fill it in the same way, but with the remaining figures.

Questionnaire step

Answer the same questions, but this time based on what happened during this 1-month period only.

CT600 step — Company & period

CT600 step — About the return

CT600 step — Income

Return 2 covers the remaining 31 out of 397 days:

Again, Taxpipe calculates the tax automatically for this shorter period.

Accounts step (same for both returns)

Your accounts cover the full 13-month period — from incorporation to year-end — and the same accounts are included with both returns.

In Taxpipe, you have two options for accounts:

1. Enter your balance sheet manually — fill in your balance sheet figures for the full period. Make sure to set the accounts start and end dates to cover the entire 13 months (1 January 2024 to 31 January 2025), not just the CT600 period. You'll need to enter the same figures on both returns.

2. Upload your iXBRL accounts — if you already have iXBRL accounts from your accountant or another tool, upload the same file to both returns.

Either way, the accounts dates must match your full accounting period, not the individual CT600 period. Taxpipe will show Box 85 (accounts for a different period) is ticked, which tells HMRC that the attached accounts cover a longer period than the return.

Review & Submit

Each return goes through Taxpipe's validation independently. Review the computed tax, pay the filing fee, and submit. You'll get a confirmation from HMRC for each one separately.

Quick checklist

• First return covers exactly 12 months from incorporation
• Second return covers the remaining days up to your year-end
• Box 50 ticked on both returns (multiple returns)
• Box 85 ticked on both returns (accounts for a different period)
• Trading profits split by number of days in each period
• Bank interest split by number of days in each period
• Capital gains allocated to the period of the actual sale
• Capital allowances calculated separately per period
• Accounts entered for the full period (not split) with correct dates
• Same accounts uploaded or entered on both returns
• Separate tax computation generated for each return
• Both returns submitted independently

Is this just a first-year thing?

This is most common for your first filing, but it can also happen if you later change your company's year-end and create a period longer than 12 months. Once you're in a regular 12-month cycle, you'll file one return per year like everyone else.