Your First Year of Business: Tax Deadlines

The first year of running a business comes with a specific set of tax and filing obligations that don’t always follow the calendar-year rhythm people expect. Here’s a realistic timeline of what to plan for, whether you’re a sole trader or a limited company.

If you’re a sole trader

Your business income is reported through Self Assessment, on the same return as any other personal income you have. The well-known deadline is 31 January following the end of the tax year, for both filing and paying what you owe.

A detail that catches new sole traders out: your first tax bill can be larger than expected because of “Payments on Account” – advance payments toward the following year’s tax, due alongside your first bill. For example, if your first year’s tax bill comes to a certain amount, you may be asked to pay that amount plus a further 50% upfront as an advance toward next year’s liability, with a second advance instalment due mid-year after that. It’s not an extra tax on top of what you owe – it’s prepayment – but it does mean your actual first payment is often significantly bigger than your first year’s tax liability alone, which is worth planning for rather than discovering on the day.

If you’re a limited company

Companies have two separate obligations running on different clocks:

• Companies House – statutory annual accounts, due from your company’s year end
• HMRC – a Corporation Tax return (CT600) and the tax payment itself, due from your Corporation Tax accounting period

The quirk that surprises a lot of first-year directors

Companies House allows your first accounting period to run for up to slightly over a year from incorporation, but HMRC’s Corporation Tax accounting periods can’t exceed 12 months. If your first year as registered with Companies House is longer than 12 months, HMRC splits it into two separate Corporation Tax accounting periods – which can mean filing two Corporation Tax returns to cover your first year, not one. This is a genuine quirk of how the two systems interact, not a mistake, but it regularly catches new directors off guard if nobody mentions it in advance. We flag this with every new limited company client specifically because it’s so easy to miss.

Director’s personal tax, on top of the company’s

If you’re a director taking salary or dividends from the company, you’ll likely still need to file a personal Self Assessment return as well as the company’s Corporation Tax return – these are two separate filings, not one combined process, each with their own deadline and their own set of figures.

What if your first year makes a loss?

It’s common for a new business to make a loss in its first year or two, particularly once setup costs are accounted for. This isn’t just a disappointing number to report – a trading loss can often be used to reduce tax in other ways, depending on your business structure, including in some cases being carried back against a previous year’s tax or forward against future profits. The rules differ for sole traders and limited companies, and making the most of a loss properly is one of the more valuable, and more commonly missed, pieces of first-year planning.

Building a buffer, not just meeting the deadline

Knowing the dates is only half the job – the other half is having the money set aside when the date arrives. A simple habit of moving a percentage of income into a separate savings account as it comes in (rather than waiting until a bill is due to work out what you owe) turns deadline day from a stressful scramble into a formality.

What if your year end doesn’t suit you?

Limited companies can change their accounting reference date (and so their year end) in most circumstances, which some businesses use deliberately – aligning it with a natural quiet period, or avoiding a year end that lands awkwardly alongside a VAT quarter or a busy trading season. This isn’t something to decide casually, since it affects your filing deadlines and, in some cases, the two-return quirk described above, but it’s worth knowing the option exists rather than assuming your year end is fixed forever once set.

A simple way to stay ahead of it

The deadlines themselves aren’t complicated once you know them – what catches people out is not knowing they exist until they’re close. Getting your accounting set up properly in the first few weeks (see our starting a business checklist) means these dates are tracked for you rather than discovered at the last minute.