The UK’s tax year for individuals runs from 6 April to the following 5 April, and the government is now considering whether it would be sensible to move the date. The Office of Tax Simplification (OTS) has been tasked with reviewing the pros and cons of changing the date to either 31 March or 31 December.
The review will focus on the implications of moving the tax year end date from 5 April to 31 March. This is both the end of a calendar quarter and the nearest month end date to the end of the current tax year. It is also the UK financial year end date, to which the UK government makes up its own accounts, and by reference to which corporation tax rates apply.
Changing the tax year end to 31 March would mean the transitional year – the first year of the change – would be shortened by five days and run from 6 April to the following 31 March.
As well as considering the implications of changing the tax year end to 31 March, the review will also consider potential alternative approaches to addressing practical issues connected with the UK’s tax year running to 5 April.
In addition, the OTS will outline the main additional broader issues, costs and benefits that would need to be considered if the end of the tax year were moved to 31 December. Many major tax regimes including the USA, France and Germany have a tax year end date of 31 December.
In this case, the transitional year would be shortened by three months and five days and run from 6 April to the following 31 December.
It is unlikely that the tax year will be changing any time soon, and we will keep you informed of any developments.