16.10.19

A History Lesson – the Tax Year End

As you will no doubt know, our tax year ends on 5th April in the UK, not coinciding with the end of the calendar year as it does in many other countries. This has been the case for over 200 years. While the date can seem like it has been plucked from thin air, it is such for a very specific reason.

Calendar and computer, Tax Year End

 

Julian and Gregorian calendars

It dates back to 1582, when the Julian calendar was changed. This calendar, while it was fairly accurate, was different from the solar calendar by 11.5 minutes each year. This tiny difference added up after hundreds of years until there was a 10 day difference between the solar and Julian calendars. As a result, Pope Gregory XIII introduced the Gregorian calendar in order to rectify the difference.

At this time, the British tax year began on 25th March because this was the old New Year’s Day in England and Ireland (also know as “Lady Day”). Lady Day became one of the “quarter” days in the financial year, along with Midsummer, Michaelmas and Christmas. Lady Day was the first and so all accounts had to be settled by then, making it the start of the financial year.

Making changes to the tax year end

However, the British did not introduce the Gregorian calendar straight away and their year eventually fell 11 days behind. Therefore, when they decided to change their calendar, they decided to cut 11 days in September to catch up with the rest of Europe. Although, to ensure there was no loss in revenue the Treasury extended the tax year by II days, meaning the tax year would end on 4th April.

This system worked effectively until 1800, which was not a leap year in the new calendar but would have been in the Julian system. Hence, the Treasury moved the year end again to 5th April, where it has remained unchanged ever since.

 

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