Start of tax year could move back – Office of Tax Simplification
A move to March 31 would bring individuals into line with corporations.
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The tax year could be altered to bring it into line with calendar months, a Government advisory body has mooted.
A review has been launched which could see the end of tax years for individuals starting on April 6, with April 1 or January 1 suggested as potential dates.
The Office of Tax Simplification – an independent adviser to Government on tax simplification – said its scoping review would focus on the costs and benefits of moving the tax year end date from 5 April to 31 March.
A move to March 31 would bring individuals into line with corporations and the UK Government’s own accounts which run to the same date.
Many countries use 31 December 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 OTS said: “The UK’s tax year for individuals runs from 6 April to the following 5 April. This is for historical reasons and has been the case for hundreds of years; the UK’s modern tax system and infrastructure have been developed around this date.
“By contrast, accounting systems used by businesses have been developed around month and quarter ends.
“Across businesses and internationally, it is common to account to a month end date. Many countries use 31 December 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 first year after such a move would see the tax year shortened by five days if the date was moved to March 31, while moving it to fall into line with calendar years – such as in France Germany and the US – would mean a transitional year shortened by more than three months.