Would moving the start of the tax year simplify things for individuals?

June 10, 2021

The Office of Tax Simplification has recently mooted bringing the end of the tax year for individuals into line with the calendar month which could potentially see it move from its current position on 5 April to either 31 March or 31 December.

We are often asked why the new tax year starts on 6 April, which seems to be quite an arbitrary date.  This is however for historical reasons and has been the case for almost 250 years.  (more details on our blog here).

Many countries use a 31 December tax year end for their government accounts and the two most popular accounting dates for multinationals are the calendar year end date of 31 December and 31 March. The UK financial year for government accounting and for companies runs from 1 April to 31 March.

What are the implications and which tax year end date would make most sense?

It’s all about simplification

Obviously, the vast majority of people are in favour of simplifying the tax year.  It’s a no-brainer.  Moving the tax year end to 31 March, in theory, makes a lot of sense because many people use this date as an approximation anyway. 31 December could simplify things further, for some.  At the end of the day, as with many things, the simpler the solution, the better the result will be. However, at this stage, it’s unclear what the economic benefits will be of moving the tax year back by five days and we believe there are potentially more pressing things to fix in the tax system for individuals and businesses, than this.

Let’s see what the outcome of the review is and consider all the economic costs and benefits.

Photo by Erda Estremera on Unsplash