Will the Tax Year end be changing?
The Office of Tax Simplification (OTS) announced this week that it is to examine the benefits, costs and wider implications of moving the tax year end for individuals to 31st March or 31st December. The implications that will be looked at will include tax credits and benefits, amongst others.
The current 5th April tax year end is a historical hold-over, and dates back to 1752 when we moved from the Julian to the Gregorian calendar. The modern tax system and infrastructure have evolved around this date.
Business accounts report using month and quarter ends both in the UK and internationally, so a 5th April tax year end for individuals is quite an anomaly. Many countries use 31st December for government reporting, while the two most popular accounting dates for multinationals are 31st December and 31st March.
Why choose those dates?
The suggestion of 31st March aligns with the end of a calendar quarter and is the nearest month end to the current tax year end.
The suggestion of 31st December would bring the UK into alignment with the USA, France and Germany, who all have a tax year end of 31st December.
When will we know more?
The OTS has said that it will publish its report during this summer. As usual, as soon as we hear any more, we’ll let you know. If things do change, there’s likely to be a couple of years’ notice, as it will take time to amend all of the affected HMRC systems!
For clarity, there is no suggestion at this stage of any changes being imposed for businesses.
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