Often when meeting with payroll professionals around the world, they wonder why the United Kingdom tax year commences on 6th April annually. Why is that when so many countries around the world celebrate both the new year and the tax year on 1st January. And even then, why the 6th and not the 1st April (April fools day).
Why does the UK tax year start on 6th April each year? Well, it used to be New Year’s Day!
In 1752 the British calendar aligned with the rest of Europe (moving from the Julian calendar to the Gregorian calendar) and moved New Year’s Day to 1st January. Until then New Year’s Day was 25th March annually, 9 months before Christmas Day known also as Lady Day or the day of Annunciation (the day that the Angel Gabriel appeared to Mary).
At the same time the calendar dropped 11 days from the calendar to fully align. In September 1752, 2nd September was followed by 14th September. The people were unhappy with being robbed of 11 days of their lives and took to the streets to protest. The focus of their fury was that their taxes were not adjusted and so they were expected to pay a full year’s tax, despite the fact that the year had only 354 days.
The Treasury wanted to ensure there would be no loss of tax revenue and decided that the tax year should remain as 365 days. And so the beginning of the following tax year was moved from 25th March to 5th April.
Having done it once, the Treasury then decreed in 1800 that there would be another lost day of revenue, given that the century end would have been a leap year under the Julian calendar whereas it was not under the new Gregorian calendar. So 1800 was a leap year for tax purposes but not for the calendar. The tax year start was moved to 6th April and has stayed there since.
HAPPY NEW TAX YEAR!
In its third year of operation and used by thousands of payroll professional, even copied by others and published as their own, some with permission, PAYadvice publish details of important information that impacts payroll professionals and payroll software and services. This resource covers the important details for the whole of the United Kingdom along with the Channel Islands (Guernsey and Jersey) and the Isle of Man.
For details of the tax, National Insurance, statutory payments, student loans etc PAYadvice have produced the Legislation update 2023.