First-Year Accounts for New Companies

Your first set of accounts as a new limited company works differently from every subsequent year. The accounting period is often longer than 12 months, the deadlines are more generous, and there are specific traps that catch first-time directors. Getting this right sets the tone for your company’s compliance record.

Your first accounting period

When you register a company at Companies House, your first accounting period runs from the date of incorporation to your accounting reference date (ARD). The ARD is automatically set to the last day of the month in which your incorporation anniversary falls.

This means your first period is almost always longer than 12 months – potentially up to 18 months.

Example

If you incorporate on the 1st of a month, your first period is almost exactly 12 months. If you incorporate mid-month, it extends.

First-year filing deadlines

New companies get slightly longer for their first filing:

The 21-month deadline for first accounts is more generous than the standard 9-month deadline that applies in subsequent years. Do not confuse the two – from your second year onwards, you have only 9 months.

Example timeline

For a company incorporated on 15 July 2024 with an ARD of 31 July 2025:

Corporation Tax: two periods, not one

HMRC does not allow a Corporation Tax accounting period to exceed 12 months. If your first accounting period is longer than 12 months (which it usually is), HMRC splits it into two:

• The first 12 months
• The remaining period

You file two separate CT600 returns for what Companies House treats as a single set of accounts.

This means you need to apportion your income and expenses across the two Corporation Tax periods. Your accounting software should handle this, but it is worth checking that the split is correct.

Each CT600 has its own payment deadline: 9 months and 1 day after the end of that accounting period, not the overall financial year.

What goes into first-year accounts

Your first accounts must comply with UK GAAP (either FRS 102 or FRS 105 for micro-entities). They include:

Statutory accounts

• Balance sheet at the period end date, signed by a director
• Profit and loss account (income statement) for the period
• Notes to the accounts (accounting policies, breakdown of key figures)
• Director’s report (unless you qualify for small company exemption and choose to omit it)

For Companies House

You can file abridged accounts if your company qualifies as small or micro. These contain less detail than full accounts and do not include a profit and loss account.

For HMRC

You need to file your full statutory accounts in iXBRL format alongside each CT600. The accounts must show the figures for the relevant Corporation Tax period.

Small company and micro-entity thresholds

Most new companies qualify as small or micro-entity in their first year. The thresholds are:

You must meet at least two of the three criteria. For a first period longer than 12 months, the turnover threshold is proportionally adjusted.

Qualifying as small or micro gives you several advantages:

• Simpler filing at Companies House (abridged or micro-entity accounts)
• No audit requirement (small companies are exempt)
• Fewer disclosure requirements in the notes to the accounts

Common first-year mistakes

Not registering for Corporation Tax

HMRC does not automatically know you have started trading. You must register for Corporation Tax within three months of starting any business activity. Business activity includes buying stock, invoicing customers, employing staff or even advertising. If you miss this deadline, HMRC can charge a penalty.

Mixing personal and business expenses

New directors often use personal bank accounts for business expenses in the early days. While this is not illegal, it makes bookkeeping much harder and can lead to problems at year end when you need to separate personal and business transactions. Open a business bank account as early as possible.

Not keeping records from day one

Every receipt, invoice and bank transaction from the date of incorporation is relevant to your first accounts. If you only start keeping records once trading begins, you may miss deductible expenses like formation costs, equipment purchases or professional fees.

Forgetting pre-trading expenses

You can claim pre-trading expenses incurred up to seven years before trading began, provided they would have been deductible if incurred during trading. Common examples:

• Company formation fees
• Legal and professional fees
• Market research costs
• Website development
• Equipment purchased before launch

Confusing the two Corporation Tax periods

Because HMRC splits your first year into two periods, you need to track which period each item of income and expenditure falls into. Capital allowances (such as the Annual Investment Allowance) are available for each period, but the AIA limit is proportionally reduced for periods shorter than 12 months.

Dormant companies

If your company has not traded at all during its first period – no income, no expenses, no bank transactions – you can file dormant company accounts. These are a simplified balance sheet showing only the shares issued at incorporation.

You still need to file accounts with Companies House by the deadline. A dormant company does not need to file a CT600 with HMRC provided you have told HMRC the company is dormant.

Changing your year-end date

If the automatic ARD does not suit your business, you can change it by filing a form AA01 with Companies House. For your first accounting period, you can:

• Shorten the period (no restrictions)
• Extend the period to a maximum of 18 months from incorporation

Many directors change their year end to 31 March to align with the tax year, which makes salary and dividend planning simpler.

What happens after year one

From your second year onwards:

• Your accounting period is exactly 12 months
• Accounts are due at Companies House within 9 months of the year end (not 21 months)
• You file one CT600 per year (not two)
• The general rhythm of filing becomes predictable

The first year is the hardest because the rules are different and everything is new. Once you have filed your first accounts successfully, the process repeats with shorter deadlines but fewer complications.

Getting it right from the start

The decisions you make in your first year – your year-end date, your accounting framework, whether to file micro-entity or small company accounts – carry forward into every subsequent year. Spending time to set these up properly is an investment that pays off through simpler, cheaper compliance in every year that follows.