The OTS published a document last month setting out the scope of a review into the benefits, costs and wider implications of changing the date. It said 31 March was both the end of a calendar quarter and the nearest month-end date to the end of the current tax year on 5 April. It is also the UK financial year-end date, to which the Government makes up its own accounts, and by reference to which UK corporation tax rates apply.
The other option under consideration by the OTS is to run future tax years to 31 December, similar to the regimes in place in the United States, France and Germany. Should this be pursued, a transitional tax year could in theory run from 6 April to 31 December – three months and six days shorter than the typical tax year.
The OTS said:
“For historical reasons, the UK’s tax year for individuals runs from 6 April to the following 5 April.
“This has been the case for hundreds of years and the UK’s modern tax system and infrastructure has been developed around this date.
“By contrast, accounting systems used by businesses have been developed around month and quarter-ends.
“Across businesses and internationally, it is common to account to a month-end date. The UK financial year for government accounting and for companies runs from 1 April to 31 March.
“While primarily addressing tax simplification issues, the review will also take account of the implications of any change in other areas, such as in relation to tax credits and benefits.”
Self-employed individuals currently have to balance different deadlines for income tax and potentially UK VAT, adding to administrative pressures they face.
Talk to us about your tax obligations.