For individual traders the decision is very much tied up with the tax position. Tax Cafe has the following guidance:
'It’s even easier for sole traders to change their accounting date, as they don’t need to tell Companies House. The consequences of the change can be much more complex, however – but extremely beneficial in some cases.
The sole trader simply draws up accounts to their new accounting date and puts this date on their Tax Return. For the new date to be effective for tax purposes the Tax Return must be submitted on time and the new accounting period must not exceed eighteen months. Unless the change is made for commercial reasons, there must not have been another earlier change in the previous five tax years.
Your taxable profit for the year in which the change takes place depends on the length of your accounting period and on when your new accounting date falls.
If you’ve shortened your accounting period, you will have either one or two accounting dates falling in the tax year. If just one accounting date falls in the tax year, you will be taxed on your profits for the period of twelve months ending on your new accounting date. This means that part of your profits for the previous accounting period will be taxed twice. Any profit which is taxed twice is known as an ‘overlap profit’. This also frequently occurs when you start a new business.
Relief for your ‘overlap profit’ is given when you cease trading, or sometimes on a subsequent change of accounting date. We’ll come on to that in a minute.
It may seem like a bad idea to be taxed on the same profit twice, but sometimes you can generate future overlap relief, which could later save you tax at 42% or even more, without paying any extra tax now.'
I personally have seen overlap relief applied very quickly, but in my personal case I had to wait until I went out of that particular business.