28 Oct How to change your Year End Date and how it can benefit you?
If you want your financial year to run for more, or less than 12 months, you can change your company’s financial year end.
You can apply online, by post or ask a company like SQK Accountancy in Manchester to help you with your application.
You can’t change your financial year end if your accounts are overdue. You can shorten your financial year as many times as you want to.
If you want to lengthen your company’s financial year, you can do so once every 5 years to a maximum of 18 months. This may be extended if your company is:
- In administration.
- Has permission from Companies House
- You are aligning dates with a subsidiary or parent company
There are a number of benefits to be had in taking this action, the main one being to defer Corporation Tax. This is especially important in the case of a company that has falling profits. For example:
You are due to pay corporation tax of £12.000 from the company profit of £60,000 over 12 months. However, the last six months profit only amounted to £30,000. Tax periods cannot be extended for longer than 12 months, but you can extend your year- end by 18 months and pay the corporation tax in two payments. This would mean that rather than paying £12,000 in one period, you could pay tax on only £30,000 for the first period, which would be a sum of £6,000 and the second payment of £6,000 will become due 6 months later.
Another benefit of changing your financial year end is to avoid late payment, which of course means you will avoid a fine. Therefore if you do find that the date is looming and you have not been able to get the work done, you can lengthen the tax period, which will give you more time. You can however, only do this once every 5 years.
Other benefits include:
Aligning Group Accounts:
It is better to have all a company’s groups with the same year end date. This makes it much easier for the accounts department.
Aligning Group VAT
If group companies trade between one another it is easier for administration purposes.
Aligning the date with the end of your personal tax year
If you are a director or a shareholder of a company, it makes sense to have company and personal taxes prepared together.
Changing the date so it’s more suitable for your business
If you have an end of tax year that coincides with a particular busy time in your business, you can change the date to a quieter period.
If you would like to know more about tax or VAT or you need any sort of accountancy advice, SQK Accountancy in Manchester can advise you on all your tax and VAT matters. We aim to provide a first class service at an affordable price. Contact us by filling in the form on our contact page or telephone us on 020 8798 0657 today.