Can I Change My Year-End? A guide for UK limited companies.
If you’re running a limited company, you might be wondering whether it’s possible to change your company’s year-end. The short answer is yes, it is possible. However, there are specific rules and procedures to follow when altering your company’s financial year-end date.
Why Change Your Year-End?
Before we delve into the process, it’s essential to understand why you might want to change your company’s year-end date. Here are a few common reasons:
- Align with the parent company: If your company is a subsidiary of another, changing the year-end date to match the parent company’s financial year can simplify financial reporting and consolidation.
- Tax planning: Altering your year-end date can help with tax planning strategies, allowing you to optimize your financial results for tax purposes.
- Financial reporting: Changing your year-end can make it easier to align your financial reporting with specific business cycles or industry norms.
- Simplify administration: A change in year-end might make it more convenient for your company’s administration and accounting processes.
The Process of Changing Your Year-End:
Changing your company’s year-end is not something you can do on a whim. The UK government has specific rules in place to ensure transparency and compliance. Here’s how you can go about it:
- Board Resolution: The directors of the company must pass a resolution to change the year-end. This decision should be made with the best interests of the company in mind.
- Shareholder Approval: If the new year-end results in a financial year longer than 18 months or if your company is public, you’ll need shareholder approval. Shareholders must pass a special resolution to approve the change.
- Notify Companies House: You must inform Companies House of the change within the specified deadlines. This involves filing the appropriate forms and paying the required fees.
- Notify HMRC: You should also inform HM Revenue and Customs (HMRC) of the change in year-end. This will ensure that your tax filings are in alignment with the new financial year.
- Adjust Your Accounts: Your company’s accounts must be adjusted to cover the period between the old and new year-ends.
- Consider Tax Implications: Changing your year-end can have tax implications. Consult with a tax professional to understand how this may affect your tax liabilities and reporting obligations.
- Record Keeping: Keep detailed records of all resolutions, notifications, and correspondence related to the change in year-end. This will help you in case of any future queries from authorities.
There is no set limit to the number of times you can shorten your company’s year-end, however you should exercise prudence and ensure that any changes align with your company’s genuine business needs and financial goals. Frequent changes without valid reasons may raise questions from regulatory authoritie.
You can only lengthen your company’s year-end once every five years, unless your meet specific eligibility criteria, so extending the year-end should only be actioned with certainty. The maximum length of a company’s financial year is limited to 18 months, unless the company is in administration.
Changing your company’s year-end will affect your filing deadlines with Companies House, unless you are in your first year.
If you’re looking to change your company’s year-end, we’d always recommend discussing with your accountant. They will be able to confirm whether it is a sensible decision, the impact it will have on your tax position, what your new deadlines are and action the change.
If you have any questions about changing your company’s year-end, please Contact Us, so we can discuss the reasons why you want to change your reporting period and how we can help.