A new company’s first accounting period for corporation tax starts when it starts to do business, not necessarily when it is incorporated, and can never be longer than 12 months. Because first accounts usually run for more than a year, many companies have to file two corporation tax returns for their first set of accounts, with two separate payment deadlines.
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When does the first accounting period start?
Section 9 of the Corporation Tax Act 2009 says an accounting period begins when the company comes within the charge to corporation tax, and section 9(2) treats a UK resident company as coming within the charge when it starts to carry on business. GOV.UK says doing business includes buying, selling, advertising, renting a property and employing someone. A company that has none of these activities is usually dormant for corporation tax.
So a company that trades from the day it is formed has a first accounting period starting on its incorporation date. A company that sits dormant for a few weeks or months has a first accounting period starting on the day it begins to do business. GOV.UK’s guidance on adding corporation tax services says the company needs the date it started to do business, because its first accounting period will start from that date.
Section 55 of the Finance Act 2004 requires the company to tell HMRC in writing when its first accounting period began, no later than three months after the start of that period. Our page on registering a new company for corporation tax covers that step.
How long are the first accounts?
Company law and tax law use different periods. Under section 391 of the Companies Act 2006, a company’s accounting reference date is the last day of the month in which the anniversary of its incorporation falls, and its first accounting reference period is more than six months but not more than 18 months, starting on the date of incorporation.
GOV.UK’s example is a company set up on 11 May with an accounting reference date of 31 May the following year, so its first accounts cover 12 months and 3 weeks. That length works for Companies House but not for corporation tax, because an accounting period cannot exceed 12 months.
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Why does the first year often need two returns?
Section 10(1)(a) of CTA 2009 ends an accounting period 12 months after it began, even if the accounts carry on. A further accounting period then runs to the accounting date. GOV.UK confirms that the tax return period cannot be longer than 12 months, so a company may have to file two returns to cover its first accounts, with two payment deadlines.
GOV.UK’s examples show three typical patterns:
- Trading from incorporation: set up and trading from 11 May 2024 with an accounting reference date of 31 May 2025. One set of accounts covers the whole period, but there are two returns: 11 May 2024 to 10 May 2025, and 11 to 31 May 2025.
- Dormant start, corporation tax services added before the accounting reference date: set up 11 May 2024, trading from 22 July 2024. One return usually covers the trading period of 22 July 2024 to 31 May 2025, with no return for the dormant weeks.
- Dormant start, services not added in time: the same dates, but two returns, one for the dormant period of 11 May to 21 July 2024 and one for the trading period.
GOV.UK also says to check the notice to deliver a company tax return received after the first year. If it covers both dormant and trading periods, two returns must be filed. See our page on accounting periods and periods of account for how the two concepts fit together.
When are the first returns due?
Paragraph 14 of Schedule 18 to the Finance Act 1998 sets the filing date as the latest of several dates. Two of them are: 12 months from the end of the return period, and, where the period of account is not longer than 18 months, 12 months from the end of that period of account. For a typical first set of accounts, both returns are therefore due 12 months after the end of the accounts, even though the first accounting period ended earlier. A further alternative applies if HMRC’s notice is served late: three months from the date of the notice.
Since HMRC’s own online filing service closed on 31 March 2026, GOV.UK says companies should use commercial software to file accounts and company tax returns from 1 April 2026; paper returns are only accepted with a reasonable excuse or when filing in Welsh. The content of the return is covered in the CT600 explained.
When are the first payments due?
Payment dates follow each accounting period, not the accounts. Section 59D of the Taxes Management Act 1970 makes tax due on the day after nine months from the end of the accounting period. GOV.UK’s example for a company set up on 11 May 2024 with a first accounting period to 31 May 2025 gives two payment dates: 11 February 2026 for the period from 11 May 2024 to 10 May 2025, and 1 March 2026 for the period from 11 to 31 May 2025.
The first payment date is therefore earlier than many new directors expect. It falls about nine months after the first anniversary of starting to trade, which can be before the first accounts have even been prepared. See when corporation tax is due for payment methods and references, which differ for each period.
How are profits split between the two returns?
Where one set of accounts covers two accounting periods, HMRC’s CTM01405 says profits are normally apportioned on a time basis, by days, with a transactions basis allowed where that gives a more accurate result. Capital allowances are worked out for each period separately, and GOV.UK guidance says allowances such as the annual investment allowance are reduced proportionately in a period of less than a year.
The short second period also has reduced limits for the small profits rate and marginal relief. Even a small profit in a stub of a few weeks can exceed the reduced lower limit. Our page on corporation tax limits for short accounting periods explains the calculation.
What does a full first year timetable look like?
Illustration only. A company is incorporated and starts trading on 9 December 2025. Its accounting reference date is 31 December 2026, so its first accounts cover 388 days. It makes a profit of £80,000 for that period and has no associated companies.
| Item | First accounting period | Second accounting period |
|---|---|---|
| Dates | 9 December 2025 to 8 December 2026 (365 days) | 9 to 31 December 2026 (23 days) |
| Profit, time apportioned | £75,258 | £4,742 |
| Lower and upper limits | £50,000 and £250,000 | about £3,151 and £15,753 |
| Corporation tax after marginal relief | about £16,193 | about £1,020 |
| Payment due | 9 September 2027 | 1 October 2027 |
| Return due | 31 December 2027 | 31 December 2027 |
The Companies House deadline is separate. Under section 442(3) of the Companies Act 2006, where a private company’s first accounting reference period is more than 12 months, accounts are due by the later of nine months from the first anniversary of incorporation or three months after the end of the period. Here that is 9 September 2027. See Companies House accounts deadlines and penalties.
What mistakes come up most often?
- Filing one return for first accounts longer than 12 months.
- Paying all the tax by the second period’s date, so the first period’s tax is paid late and attracts interest.
- Using the incorporation date as the start of the accounting period when the company was dormant at first, or the reverse.
- Ignoring the notice to deliver, which may set periods that need correcting; GOV.UK says to tell HMRC if the dates are wrong.
- Applying full year limits and allowances to the short second period.
- Forgetting that a dormant period may still need its own return if HMRC’s notice covers it; see dormant company accounts.
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Related Accountapedia entries
- Long first accounts: splitting into two tax returns
- First statutory accounts for a new company
- Changing a company’s year end (accounting reference date)
- Registering a new business: which taxes
- Filing deadline for a new company’s first accounts
- Senior accounting officer duties
Sources
- legislation.gov.uk: Act 2009 c. 4, section 9
- GOV.UK: Add corporation tax services to business tax account
- legislation.gov.uk: Act 2004 c. 12, section 55
- legislation.gov.uk: Act 2006 c. 46, section 391
- GOV.UK: First company accounts and return
- GOV.UK: Trading from set up
- GOV.UK: Trading after set up
- legislation.gov.uk: Act 2009 c. 4, section 10
- legislation.gov.uk: Act 1998 c. 36, schedule 18
- GOV.UK: Closure of the service to file your company accounts and tax return
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.