Question of the day: Why does tax year start on April 6?

If you have ever stopped to ask yourself, why does the tax year start on April 6, you are definitely not alone.

The idea that the tax year doesn’t begin until we are a quarter of the way into the year is a somewhat perplexing concept for many. Accountants and taxpayers alike often wonder why this seemingly arbitrary date was chosen as the starting point for the fiscal year.

Prepare to be enlightened.

The origins of the April 6 tax year date back to the 18th century. Prior to 1752, the British Empire used the Julian calendar, which was 11 days behind the Gregorian calendar used in Europe. In 1752, the British Empire adopted the Gregorian calendar, necessitating an adjustment to the fiscal year.

No plans to change

To do this, 11 days were added to the calendar, moving the official start of the tax year from March 25 to April 6, taking into account leap years. This change aimed to align the tax year with the new calendar, ensuring a smoother transition for tax collection and administration.

You might then ask, why was it originally in March? Good question. Starting a new year on January 1 is relatively new and the early Romans had March as the first month of the year – which explains why September, October, November and December are so named, bearing in mind that the Latin for seven to 10 is septem, octo, novem and decem.

Over the centuries, the April 6 tax year has become deeply ingrained in the UK's financial and administrative systems. Changing the date would be a complex and costly process, with significant implications for businesses, individuals and the Government. As a result, it has been retained to maintain continuity and stability in the tax system.

Sticking with tradition

From an accounting perspective, the April 6 tax year provides a logical break between financial periods. It allows accountants and businesses to close their books at the end of March and start fresh in April, making it easier to analyse financial performance and prepare for the new fiscal year. This consistency aids in tax planning and compliance, providing accountants with a structured framework for their work.

While April 6 may seem a peculiar date, its historical and practical underpinnings justify its continued use. For accountants, understanding the origins of this date can shed light on the nuances of the UK's tax system and how it influences financial planning and reporting. It also highlights the importance of adapting to historical conventions and traditions, which continue to shape the modern financial landscape.

 

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