Yep, that's what I've done in the past and what I'll be implementing this summer for my new place.
Previously they've created a new category on the existing moodle site (2014/15, 2015/16, 2016/17) but that has meant manually duplicating every course into the new year.
The planned system will be to freeze enrolments, clone the site to an archive server, run an upgrade to Moodle and plugins on the LIVE server and do any planned maintenance, link the course enrolments back up so that the new cohorts get automatically enrolled from our student record system (external database plugin).
We'll keep those archives for x years, then back them up and remove them from the archive server in line with a data retention policy that is currently being discussed.