Can I Change My Accounting Year End Date?

This is a question I get asked more often than you might expect, usually at a point where a business is growing, restructuring, or trying to make life a little easier. In my opinion, the fact that so many people ask it tells me something important. Most business owners accept their accounting year end as fixed and permanent, when in reality it is often far more flexible than they realise.

From experience, changing an accounting year end can be a sensible and strategic move, but it is not something to do without understanding the implications. There are rules, timing considerations, and knock on effects for tax, reporting, and administration. In this article, I will explain when you can change your year end, why you might want to, and what you need to watch out for.

What Is an Accounting Year End?

Before going any further, it is worth clarifying what we mean by an accounting year end. In simple terms, it is the date your company or business uses to close its books and prepare accounts.

For limited companies, this is the end of the accounting period used for Companies House and corporation tax purposes. For sole traders and partnerships, it relates to the accounting period used to calculate taxable profits for Self Assessment.

From experience, confusion often arises because businesses assume the accounting year end is the same as the tax year. In many cases it is not, and that distinction matters when changes are made.

Can You Change Your Accounting Year End?

The short answer is yes, in most cases you can change your accounting year end. However, how you do it and how often you are allowed to do it depends on your business structure.

For limited companies, Companies House allows you to change your accounting period by shortening or extending it, within certain limits. For unincorporated businesses, the rules are different and tied more closely to Self Assessment.

In my opinion, understanding these differences early avoids mistakes that can create unnecessary tax headaches later.

Changing the Year End for a Limited Company

From experience, limited companies have the most flexibility. You can change your accounting year end by filing accounts that cover a different period to the previous year.

There are some key rules to be aware of. You can shorten your accounting period as often as you like. You can usually extend it, but not beyond 18 months in total, and not more than once every five years unless there is a valid reason.

Valid reasons might include aligning with a group year end, bringing the date in line with a new parent company, or responding to a change in business activity. From experience, Companies House is generally pragmatic if the reason makes commercial sense.

How to Change a Limited Company Year End

In practical terms, changing the year end usually happens when accounts are prepared. Instead of preparing accounts to the usual date, the period is either cut short or extended.

Companies House is notified automatically when the accounts are filed. There is no separate form for changing the year end itself.

However, I have to say, corporation tax is a separate consideration. HMRC treats accounting periods differently, and a long accounting period will usually be split into two for corporation tax purposes. From experience, this is something that catches people out.

Corporation Tax Implications

This is where professional advice really matters. If you extend your accounting period beyond 12 months, HMRC will split it into two corporation tax accounting periods.

Each period will have its own corporation tax calculation and payment deadline. In my opinion, failing to plan for this is one of the biggest risks when changing a year end.

From experience, I have seen businesses accidentally create overlapping payment obligations simply because they did not realise how HMRC would treat the change.

Changing the Year End for Sole Traders and Partnerships

For sole traders and partnerships, the rules are different and, in some ways, more restrictive.

Most unincorporated businesses use a year end that aligns with the tax year, either 31 March or 5 April. This simplifies Self Assessment and avoids complex overlap profit calculations.

You can choose a different year end, but from experience, doing so often creates more problems than it solves. Changing the accounting date can trigger overlap profits, which may not be relieved until the business ceases or changes its year end again.

In my opinion, this is an area where advice is essential. What looks like a simple administrative change can have long term tax consequences.

Why Businesses Choose to Change Their Year End

There are several common reasons why businesses decide to change their accounting year end. From experience, these usually fall into a few clear categories.

One reason is seasonality. If your busiest period falls around your current year end, preparing accounts can be stressful and disruptive. Moving the year end to a quieter period often makes life easier and improves accuracy.

Another reason is alignment. Businesses that are part of a group often want all entities to share the same year end. This simplifies consolidation and reporting.

Some businesses change their year end to improve cash flow planning, especially where corporation tax payments clash with peak expenditure periods. In my opinion, this can be a very sensible reason when done properly.

Administrative and Reporting Considerations

Changing your accounting year end affects more than just tax. It also impacts filing deadlines, internal reporting, and sometimes external contracts.

From experience, lenders and investors often expect consistency. If you are changing your year end, it is worth considering whether this needs to be communicated to third parties.

Payroll, VAT, and management accounts are usually unaffected, but year end processes and timelines will change. In my opinion, planning this transition carefully avoids unnecessary disruption.

VAT and Year End Changes

One area I am often asked about is VAT. From experience, changing your accounting year end does not automatically affect your VAT quarters.

VAT periods remain based on your VAT registration details unless you choose to change them separately. However, when preparing accounts, VAT balances at the year end need to be reconciled carefully.

In my opinion, this is another example of why attention to detail matters when making changes like this.

Common Mistakes to Avoid

Over the years, I have seen a few recurring mistakes when businesses change their accounting year end.

One is failing to consider corporation tax splitting and payment dates. Another is assuming HMRC and Companies House operate under the same rules. They do not.

A third is making the change without understanding why it is being done. From experience, a year end should support the business, not just be changed for the sake of it.

Is Changing Your Year End a Good Idea?

This depends entirely on your circumstances. In my opinion, there is no universally right or wrong answer.

For some businesses, changing the year end brings clarity, efficiency, and better alignment with operations. For others, it creates unnecessary complexity.

From experience, the key is understanding the full picture before making the decision. Tax, administration, cash flow, and reporting all need to be considered together.

How an Accountant Can Help

I have to say, this is one of those areas where having an accountant involved early can save a lot of trouble later.

An accountant can explain the rules, model the tax impact, and help you choose a year end that supports your business goals. They can also manage the practical side, ensuring filings are correct and deadlines are met.

In my opinion, the value here is not just technical knowledge. It is perspective. Having seen how these decisions play out over time makes a real difference.

What Usually Works Best

From experience, businesses that choose their accounting year end deliberately tend to fare better than those that simply inherit one and never revisit it.

A year end aligned with your operational cycle, cash flow patterns, and reporting needs usually makes life easier. It supports better decision making and reduces stress around compliance.

I have to say, revisiting your year end every few years as the business evolves is not a bad habit to have.

So, can you change your accounting year end?

Yes, in many cases you can. The more important question is whether you should.

From experience, the right answer comes from understanding your business properly and thinking ahead. When the change is planned and supported by good advice, it can be a positive step forward. When it is rushed or misunderstood, it can create complications that last for years.

In my opinion, if you are considering changing your accounting year end, it is worth having the conversation early and doing it with confidence rather than guesswork.