Happy New (Tax) Year 2025

Here it is again, the start of a New Tax Year.

Often when meeting with payroll and tax professionals from overseas, 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 (maybe more suitable as April fools day).

Why does the UK tax year start on 6th April each year? Well, it used to be New Year’s Day!

So New Year’s Day was not always on the 1st January!

Julian Calendar

The Julian calendar, introduced by Julius Caesar in 45 BCE, had been widely used throughout Europe for more than a millennium. It operated on the assumption that the average solar year consisted of precisely 365.25 days, resulting in a leap year every four years. However, this estimate was slightly longer than the actual solar year, causing a discrepancy to accumulate over time.

By the 16th century, the calendar had shifted approximately ten days out of sync with the seasons. This discrepancy had significant implications for religious events tied to the calendar, particularly the calculation of Easter.

Gregorian Calendar

To rectify the issues caused by the Julian calendar, Pope Gregory XIII introduced the Gregorian calendar in 1582. The Gregorian calendar aimed to more accurately reflect the Earth’s orbit around the Sun and better align with the astronomical year. It accounted for the fact that the solar year is slightly shorter than 365.25 days, averaging approximately 365.2425 days.

When did the United Kingdom change?

In 1752 the British calendar aligned with the rest of Europe (moving from the Julian calendar to the Gregorian calendar) and moved the celebrated New Year’s Day to 1st January at the same time. 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 to fully align and match the seasons. 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 Tax Year start is not moved

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.

So when does the 6th April come into play?

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 ever since.

2025/2026 a new tax year of change

With the election of the new Labour government during 2024, significant changes impacting payroll and employment have been progressed.

• A significant increase in employer National Insurance Contributions with the:
  • Dropping of the secondary threshold to £5,000 per annum
  • Increase in employer contributions to 15%
  • Increase of the employment allowance to £10,500 and those who qualify expanded
• Significant increases to National Minimum and National Living Wage with the NLW age differential being reduced
• The introduction of a new, but complex, Statutory Neonatal Care Pay
• And so on with devolved measures relating to Scottish Tacation

And with expansion of employment rights and proposed changes to Statutory Sick Pay (SSP), restriction on use of zero hours, prevention of fire and rehire, maternity protection expansion and so on, 2026/2027 will see further additional changes.

So HAPPY NEW TAX YEAR from PAYadvice.UK!

In its fifth year of operation and used by thousands of payroll professional, even copied by others and published as if 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 2025 along with downloadable resources.

PAYadvice.UK 6/4/2025