How a first year end differs from later ones
A company's first financial year starts on the day it is incorporated and ends on a date Companies House sets automatically, so the first accounts usually cover a little more than 12 months. Corporation tax works in periods of no more than 12 months. First accounts that run longer than a year therefore need two company tax returns, each with its own payment date.
The deadlines for a first period are also worked out differently from later years. Companies House allows longer for first accounts, while HMRC's payment and filing dates run from the end of each tax period. Missing either set of dates leads to automatic penalties, and Companies House lists a company's first accounts among the reasons an appeal against a penalty may not succeed.
This guide takes the first year end in order. It covers when the financial year ends, the deadline for the first accounts, what small and micro-entity accounts contain, how corporation tax periods work in the first year, the confirmation statement, paying dividends properly, what to gather for your accountant and the penalties for filing late. A worked example follows a company incorporated part-way through a month.
What this guide covers
- How your first year end and tax periods are set
- Deadlines for accounts, tax returns and payments
- What small and micro-entity accounts contain
- Dividends, confirmation statements and penalties
When your first financial year ends
Companies House sets a new company's accounting reference date, the date its financial year ends, as the last day of the month in which the first anniversary of incorporation falls (Companies Act 2006, section 391). A company incorporated on 6 April 2025 has an accounting reference date of 30 April, so its first financial year runs from 6 April 2025 to 30 April 2026 and every later year ends on 30 April.
You can move the year end by filing form AA01 with Companies House before the filing deadline for the period you want to change. A period can be shortened as often as you like. It can be extended to no more than 18 months from its start, counting the date of incorporation as the first day of a first period, and a company can normally extend only once every five years (Companies House accounts guidance).
The deadline for your first accounts
After the first year, a private company has nine months from the end of its financial year to file accounts at Companies House. First accounts that cover more than 12 months are due 21 months after the date of incorporation, or three months after the accounting reference date if that is later (section 442).
First accounts that cover 12 months or less have the normal nine months. If you shorten a period, the deadline becomes nine months after the new year end or three months after Companies House receives the change, whichever is later. The deadline is exact to the day and still applies when it falls on a Sunday or a bank holiday, and accounts rejected after the deadline has passed are treated as late.
From 1 April 2028, Companies House will only accept accounts filed through commercial software. The company tax return already has to be filed that way, because HMRC's online service for filing accounts and tax returns together closed on 31 March 2026.
Micro-entity and small company accounts
The size of the company decides how much its accounts must contain. For financial years beginning on or after 6 April 2025, a company qualifies as a micro-entity or as small by meeting at least two of the three limits below. In its first financial year it only has to meet them in that year (section 382, section 384A).
| Micro-entity | Small company |
|---|
| Turnover | £1 million or less | £15 million or less |
| Balance sheet total (all assets) | £500,000 or less | £7.5 million or less |
| Average number of employees | 10 or fewer | 50 or fewer |
| Accounts prepared for shareholders | Simplified balance sheet and profit and loss account, with very few notes | Balance sheet, profit and loss account and notes |
| Directors' report | Not required | Required, but does not have to be filed |
The balance sheet total is the total of the company's assets, including cash. A startup that raised £600,000 and still holds more than £500,000 of it at the year end fails the micro-entity balance sheet test. It still qualifies as a micro-entity if its turnover is £1 million or less and it has 10 or fewer employees. When a first financial year is longer or shorter than 12 months, the turnover limit is adjusted in proportion.
At present both types of company can leave the profit and loss account out of the copy filed at Companies House. From 1 April 2028 it must be filed, with an option to keep it off the public register. Banks, insurers, electronic money issuers and certain investment firms cannot use the small company rules whatever their size.
Audit exemption
A private company that meets at least two of the small company limits can claim exemption from audit (audit exemption guidance). It still needs an audit if its articles of association require one, or if shareholders holding at least 10% of the shares ask for one in writing at least one month before the end of the financial year. Public companies, banks, insurers, electronic money issuers and certain investment firms must have an audit.
Corporation tax periods in the first year
A company's first accounting period for corporation tax starts when it begins to do business, which includes trading and receiving income such as bank interest. A company that has been incorporated but is not yet doing business is dormant for corporation tax. You must tell HMRC within three months of starting to do business, normally by adding Corporation Tax services to the company's business tax account (HMRC registration guidance).
An accounting period for corporation tax cannot be longer than 12 months. When a company has done business since incorporation and its first accounts cover more than 12 months, it files two tax returns, one for the first 12 months and one for the rest of the period. The profit in the accounts is split between the two periods by the number of days in each (Corporation Tax Act 2009, section 52). Capital allowances are worked out separately for each period, and the £50,000 and £250,000 profit limits that set the rate of corporation tax are reduced in proportion for the shorter one. Our guide to corporation tax for startups explains the rates and reliefs.
A company that started trading after incorporation and registered before its accounting reference date usually files returns for the trading period only. One that registered later files a return for the dormant period as well (HMRC guidance on first accounts and returns).
Payment and filing deadlines
Corporation tax for each accounting period is due nine months and one day after the period ends, unless the company's profits are large enough for it to pay in quarterly instalments. The tax return is due 12 months after the end of the accounting period. When the accounts cover more than 12 months, both returns are due 12 months after the end of the period the accounts cover (Finance Act 1998, Schedule 18, paragraph 14). A return must be filed even if the company made a loss or owes no tax.
A company making its first claim for research and development relief must send HMRC a claim notification within six months of the end of the period its accounts cover, or the claim is invalid (claim notification guidance). Our R&D tax relief guide covers what qualifies.
The confirmation statement
Every company must also file a confirmation statement at least once every 12 months, confirming that the information Companies House holds about it is up to date (Companies House confirmation statement guidance). The first review period ends 12 months after incorporation, and the statement can be filed up to 14 days after that. Before filing, you must tell Companies House about any changes to the directors, people with significant control, the registered office address and the registered email address. The statement also confirms that the company's intended future activities are lawful.
The fee is £50 online or £110 on paper, paid with the first statement in each 12-month payment period. Companies House will not accept the statement until every director has verified their identity. Failing to file can lead to a fine of up to £5,000 and the company being struck off the register.
Paying dividends properly
A company can only pay dividends out of profits available for distribution, which are its accumulated realised profits less its accumulated realised losses (Companies Act 2006, section 830). Money raised by selling shares to investors is share capital and cannot be paid out as a dividend. A company whose losses so far exceed its profits cannot pay a dividend until later profits cover those losses, or until the losses are written off through a formal reduction of capital.
Whether a dividend is lawful is normally judged against the company's last annual accounts. A dividend declared during the first accounting period, or before the first accounts have gone to shareholders, can instead be justified by initial accounts, which must allow a reasonable judgement of the company's profits, losses, assets, liabilities and reserves (section 836). A private company does not have to have them audited or file them.
For each dividend, GOV.UK guidance says the company must:
- hold a directors' meeting to declare the dividend and keep minutes, even if there is only one director
- write a dividend voucher showing the date, the company name, the names of the shareholders being paid and the amount
- give a copy of the voucher to each shareholder paid and keep a copy with the company's records
Dividends usually have to be paid to all shareholders, and they cannot be deducted for corporation tax (GOV.UK guidance on taking money out of a company). Shareholders pay dividend tax above the £500 dividend allowance at 10.75%, 35.75% or 39.35% for 2026/27. A shareholder who knew, or had reasonable grounds to believe, that a dividend was paid without enough distributable profits must repay it (section 847). The Insolvency Service says a director who receives such a dividend will usually be treated as having taken a director's loan, which brings in the tax rules in our guide to director's loan accounts.
What to gather for your accountant
Your accountant will need these records for the whole of the first period, up to the year end.
- Statements for every bank account, card and payment platform the company used, such as Stripe or PayPal
- Sales invoices, and a list of amounts customers still owed at the year end
- Purchase invoices and receipts, and a list of bills still unpaid at the year end
- Invoices for equipment such as laptops and servers, with purchase dates, for capital allowances
- Details of every share issue, including dates, numbers of shares, prices paid and any SEIS or EIS paperwork
- Loan agreements, grant agreements and any grant claims made
- Payroll reports and pension contributions
- A list of personal costs paid by the company, and company costs paid personally by directors
- Subscriptions paid in advance for periods after the year end, and customer contracts invoiced in advance
- Costs incurred before the company started trading
- A stock count at the year end, if the company sells physical products
- Records of development projects, if the company intends to claim research and development relief
Books kept up to date during the year already hold most of this. Our bookkeeping service keeps a company's Xero records reconciled through the year.
Late filing penalties
Companies House
Companies House charges a private company an automatic penalty when its accounts arrive after the deadline.
- Up to 1 month late: £150
- 1 to 3 months late: £375
- 3 to 6 months late: £750
- More than 6 months late: £1,500
The penalty doubles if the accounts are late two years in a row (Companies House late filing penalties). Companies House lists first accounts and an accountant's mistake among the reasons an appeal may not succeed. Failing to deliver accounts on time is also a criminal offence for which directors can be prosecuted.
HMRC
For company tax returns due on or after 1 April 2026, HMRC charges these penalties.
- 1 day late: £200
- 3 months late: another £200
- 6 months late: HMRC estimates the tax bill and adds a penalty of 10% of the unpaid tax
- 12 months late: another 10% of any unpaid tax
If a return is late three times in a row, each £200 penalty becomes £1,000 (HMRC late filing penalties). Tax paid late also carries interest from the due date at the Bank of England base rate plus 4% (HMRC interest rates).
Worked example of a company incorporated part-way through a month
The figures are illustrative. A software company is incorporated on 10 February 2026 and starts trading the same day.
The accounts
Its accounting reference date is 28 February, the last day of the month in which 10 February 2027 falls. The founders want a 31 March year end, so they file form AA01 to extend the first period to 31 March 2027. The first accounts cover 10 February 2026 to 31 March 2027, which is 13 months and three weeks and within the 18-month limit.
The filing deadline is the later of 21 months after incorporation, which is 10 November 2027, and three months after the new year end, which is 30 June 2027. The accounts are due at Companies House by 10 November 2027.
The tax returns
Because the accounts cover more than 12 months, there are two accounting periods for corporation tax.
- Period 1 runs from 10 February 2026 to 9 February 2027, which is 365 days.
- Period 2 runs from 10 February 2027 to 31 March 2027, which is 50 days.
The taxable profit for all 415 days is £41,500, or £100 a day. Period 1 takes 365 × £100 = £36,500 and period 2 takes 50 × £100 = £5,000. For period 2, the £50,000 limit for the 19% rate is reduced to £50,000 × 50/365 = £6,849. Both profits are below their limits, so both are taxed at 19%.
- Period 1: £36,500 × 19% = £6,935, due on 10 November 2027
- Period 2: £5,000 × 19% = £950, due on 1 January 2028
Both tax returns are due by 31 March 2028, 12 months after the end of the period the accounts cover. The tax for period 1 is due on the same day as the Companies House deadline, so the accounts and the tax computation need to be finished well before 10 November 2027.
Other deadlines
- Telling HMRC the company is active: within three months of 10 February 2026
- First confirmation statement: within 14 days after the review period ends 12 months after incorporation, so in late February 2027
- Research and development claim notification, if this will be the company's first claim: by 30 September 2027
