When a company’s accounts cover more than 12 months, corporation tax splits them into two accounting periods: the first 12 months, and the balance up to the accounting date. Each period needs its own CT600 and has its own payment date. Trading profits are apportioned between them by days under section 52 of the Corporation Tax Act 2009, but capital allowances and chargeable gains are worked out separately for each period on what actually happened in it.

When does a period of account run past 12 months?

The most common case is a company’s first accounts. Section 391 of the Companies Act 2006 sets the accounting reference date as the last day of the month in which the anniversary of incorporation falls, and allows a first period of more than six months but not more than 18 months. GOV.UK’s example is a company set up on 11 May whose first accounts run to 31 May the following year, covering 12 months and three weeks. The full mechanics of incorporation are covered separately.

The other common case is a company that extends its year end. Section 392 of the Companies Act 2006 allows a period to be extended to no more than 18 months, and normally only once every five years; see changing a company’s year end. Either way, the accounts are a single document but the tax treatment is not.

How are the two accounting periods fixed?

Section 10(1)(a) CTA 2009 ends an accounting period 12 months after it starts if nothing ends it sooner, and section 10(1)(b) ends one on the company’s accounting date. HMRC’s manual at CTM01510 puts it simply: if a company makes up accounts for longer than 12 months, the first 12 months will normally be an accounting period. The second period runs from the next day to the accounting date.

The start date is not always incorporation. GOV.UK’s guidance on first returns shows that if a company traded from the day it was set up, 11 May 2024, with an accounting reference date of 31 May 2025, its returns cover 11 May 2024 to 10 May 2025 and 11 to 31 May 2025. If it started trading later, the first accounting period starts on that later date, and the trading period may be under 12 months so that only one return is needed. The underlying rules are explained in accounting periods vs periods of account.

How are profits apportioned between the two periods?

Section 52 CTA 2009 deals with trading profits where a period of account does not coincide with an accounting period. The profits or losses of the period of account are apportioned to the parts falling in each accounting period, and the apportionment must be made by reference to the number of days. Section 1172 of the Corporation Tax Act 2010 applies the same time basis to any other apportionment the Corporation Tax Acts require, unless a specific rule says otherwise.

In practice the tax adjusted trading profit for the whole period of account is computed first, adding back disallowable costs, and that figure is split by days. HMRC’s manual at CTM01405 says that exceptionally the profits of each accounting period may be computed by reference to the transactions that took place in it, where that gives a more accurate result. It gives property development as the typical case, where a few large, identifiable sales make a time split unrealistic, citing Marshall Hus & Partners Ltd v Bolton.

What is not time apportioned?

  • Capital allowances. For corporation tax the chargeable period for capital allowances is the accounting period (section 6 of the Capital Allowances Act 2001), so each accounting period has its own computation. Expenditure belongs to the period in which it is incurred. Where an accounting period is shorter than a year, the maximum annual investment allowance and the writing down allowance are proportionately reduced (sections 51A(6) and 56(3)).
  • Chargeable gains. Section 2A of the Taxation of Chargeable Gains Act 1992 includes in profits the gains accruing to the company in the accounting period, so a disposal is taxed in the period in which it occurs.
  • Claims and elections. Each accounting period has its own return, so claims are made period by period.

How do the rate thresholds work for a short second period?

GOV.UK’s marginal relief guidance sets a lower limit of £50,000 and an upper limit of £250,000, and says that if an accounting period is shorter than 12 months these limits are proportionately reduced. They are also divided by the number of associated companies plus one. A short second period of a few weeks can therefore have very low limits, and even a modest profit may fall into the marginal relief band. Where an accounting period straddles 1 April, CTM01405 requires its profits to be split between financial years by days before rates are applied.

When are the returns and the tax due?

Paragraph 14 of Schedule 18 to the Finance Act 1998 sets the filing date as the latest of several dates. Where the period of account is not longer than 18 months, one of them is 12 months from the end of the period of account, so both returns are normally due on the same day, 12 months after the accounting date. If the period of account is longer than 18 months, the date is 30 months from its start. HMRC’s examples at CTM93050 show both cases.

Payment works differently: tax is due nine months and one day after the end of each accounting period, so the first period’s tax is due earlier. GOV.UK’s example gives payment dates of 11 February 2026 for the period ended 10 May 2025 and 1 March 2026 for the period ended 31 May 2025. Where the long period comes from extending the year end, GOV.UK says HMRC’s accounting period dates must be updated before the original filing date of the return, or a late filing penalty may follow. Payment and filing dates are collected in corporation tax deadlines.

How does the split work in a worked example?

Illustration only. Tern Analytics Ltd is incorporated and starts trading on 1 October 2025. Its accounting reference date is 31 October 2026, so its first accounts cover 396 days. Its tax adjusted trading profit before capital allowances for that whole period is £99,000, and it bought a van for £20,000 on 1 March 2026.

Accounting period 1 Accounting period 2
Dates 1 October 2025 to 30 September 2026 1 October 2026 to 31 October 2026
Days 365 31
Trading profit (£99,000 by days) £91,250 £7,750
Capital allowances Van claimed here, as bought in this period None; any claim limited to 31/365 of the annual maximum
Marginal relief limits £50,000 and £250,000 About £4,247 and £21,233
Tax payable 1 July 2027 1 August 2027
CT600 due 31 October 2027 31 October 2027

The second period’s profit of £7,750 sits inside its reduced marginal relief band, so it does not get the small profits rate in full. Separately, Companies House must receive the first accounts by 1 July 2027, nine months after the first anniversary of incorporation under section 442(3) of the Companies Act 2006, well before the tax returns are due.

What are the common mistakes?

  • Trying to file one CT600 for the whole period of account; a return period cannot exceed 12 months.
  • Splitting capital allowances by days instead of allocating expenditure to the period in which it was incurred.
  • Claiming a full annual investment allowance in a short second period.
  • Forgetting the reduced thresholds in the short period when working out the rate.
  • Paying all the tax on the second period’s due date and incurring interest on the first.
  • Extending the year end at Companies House without updating the dates HMRC holds.

The content of each return is explained in the CT600 explained.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.