An accounting reference date (ARD) is the end of a limited company’s financial year. It represents the date on which a company must make its annual financial accounts up to.
Normally, a company’s ARD falls on the anniversary of the last calendar day of the month that it was incorporated at Companies House.
For example:
- you incorporate a company on 7 July 2023
- its accounting reference date is 31 July
- the company’s first ARD will fall on 31 July 2024
- the ARD will be the same date every year, unless you choose to change it
Any changes to the accounting reference date will inevitably affect the length of the company’s financial year.
What is the financial year of a company?
A company’s first financial year begins on the date that it is incorporated at Companies House, and it ends on the accounting reference date. Annual accounts must be completed for Companies House and HMRC to report all financial activity that takes place each financial year.
The financial year for most limited companies is 12 months, with the exception of the first year after company formation. The first financial year for most companies is slightly longer than 12 months because the ARD falls on the anniversary of the last day of the month of incorporation.
Example:
- If a company is registered on 7 July 2023, it will have an accounting reference date of 31 July 2023. Therefore, the first financial year of that company will be 12 months and 24 days
- The company’s second financial year will run from 1 August 2024 to 31 July 2025, which is exactly 12 months
- Subsequent financial years will remain exactly the same, unless the company chooses to shorten or lengthen it by changing its accounting reference date
How do I get an ARD?
Companies House will determine your ARD and notify you soon after incorporation. If you register your company online through Companies House Web Incorporation Service, you should be notified by email.
Alternatively, you can find your ARD listed on Companies House service (formerly known as Companies House BETA). This is an online search facility that provides public access to company information free of charge.
If you register a company online through Quality Company Formations, you will be able to find your ARD in your Client Account on our Admin Portal.
What is the purpose of an accounting reference date?
An ARD signifies the date on which your company’s financial year ends. At the end of each financial year, you will have to:
- Prepare full (statutory) annual accounts
- Send a copy to every shareholder in the company
- Deliver a copy of the accounts to Companies House
- Deliver a copy of the accounts to HMRC as part of your Company Tax Return
Annual accounts are used to report your financial activity for the year, up to and including the accounting reference date. You’ll need to refer to your accounts to work out how much profit or loss your company has made and how much tax you must pay.
Changing your company’s accounting reference date
You can change your company’s ARD after company formation if you want to extend or shorten your 12-month financial year. You can only do so prior to the deadline for delivering the annual accounts for your current or immediately previous financial year. However, you cannot change your ARD if your accounts are overdue.
The deadline for sending them to Companies House is 9 months after your company’s financial year-end. Therefore, any changes you wish to make to your company’s financial year must be done before this deadline. When your financial year has been changed, the filing deadline for delivering your accounts will change accordingly.
Shortening your financial year
Companies are permitted to shorten their financial year as many times as they like by as many days as they like. You can even shorten it by as little as one day. The exception is with your first set of accounts, which have to be a minimum of 6 months.
When your ARD has been changed, your company’s financial year will end on that date every year, unless you make any further changes. Your annual accounts will, therefore, report all financial activity for the period that runs from the date of company formation up to your new ARD. To change your ARD, the directors should pass a resolution.
Extending your financial year
You can extend the length of your company’s financial year by up to 18 months (or longer if your company is in administration), but you can only do this once every five years. Companies may only lengthen the financial year more than once every five years in the following circumstances:
- If the company is in administration
- If dates are being aligned with a subsidiary or parent (holding) company
- If Companies House grants special permission to do so
As with shortening, to extend your ARD, the directors will need to pass a resolution to that effect.
How to change your ARD at Companies House
To change your financial year-end and report it to Companies House, you’ll need to provide the following information by postal application or online:
- Company number
- Company name in full
- Date of accounting reference period (this is the present or immediately previous accounting period for which your annual accounts are not yet overdue)
- New accounting reference date
- Signature of director, company secretary, or other authorised individual
This information can be submitted on Companies House Form AA01 ‘Change your company accounting reference date’. You can download this and post it to Companies House, or you can complete it online through WebFiling. You may also report a change of ARD online using Quality Company Formations’ Client Admin Portal. This service is free of charge.
Most online changes are registered and updated on public record within a couple of hours. Postal changes will take significantly longer to be submitted and processed.
Is my financial year the same as my accounting period for corporation tax?
No, do not confuse these two terms! An accounting period for Corporation Tax is determined by HMRC for the purposes of preparing a Company Tax Return and paying Corporation Tax.
Unlike the financial year of your company, the accounting period for Corporation Tax will not begin until your company is ‘active’ (i.e., it has started trading or receiving income from another source). This might be the day that your company is incorporated if you start trading immediately, in which case your financial year and accounting period will start on the same day. However, if your company does not become active straight away, your Corporation Tax accounting period will start at a later date.
When your company does become active, you must tell HMRC within 3 months. You can do this by registering online for Corporation Tax. HMRC will then confirm the start date of your accounting period. It will end on your ARD, just like the annual accounts. The financial activity reported in your accounts will then be used to work out how much Corporation Tax your company owes for that period.
