Why does the UK tax year end 5th April?
A bit of history this week but with a practical outcome for 2019.
Up to 1582, Europe used the Julian calendar introduced by the Romans in 45BC. Unfortunately, the Julian calendar differed from the solar calendar by 11 ½ minutes; after 500 years this small difference meant that the Julian calendar was 10 days off the solar calendar.
To remedy this error, Pope Gregory introduced the Gregorian calendar in most of Europe under his influence, 1582. There was a notable exception, you guessed right, the British Empire. Sound familiar?
The Brits stoically maintained their use of the Julian calendar until 1752 by which time the Empire was 11 days off the dates in Europe, they then adopted the Gregorian version.
Up to the change, the 25th March was the start of the new tax year. Therefore, following the change the new beginning of the tax year was advanced 11 days (so the Treasury didn’t lose 11 days of revenue). The beginning of tax year was therefore advanced to 5 April.
But just a minute, the current tax year ends 5th April and begins 6th April?
The final twist occurred in the year 1800. This year was a leap year in the old Julian system but not in the new Gregorian calendar. Accordingly, the Treasury moved the tax year back one further day and thus, from 1800, the tax year has ended on the 5th April and begins on 6th April.
Tax options for 2018-19
And the relevance for 2018-19? Our options for adopting 99% of tax planning opportunities for 2018-19 ends on 5 April 2019, just a couple of months away.
This applies equally to individuals and all businesses with an accounting year end close to, but prior to 5 April 2019.
More importantly, this planning option applies to all taxes: income tax, capital gains tax and corporation tax; and in some cases, to National Insurance and VAT.
Organise a tax planning review now
If your personal or business tax affairs are complex, make sure you avail yourself of this moment of reflection before 5 April 2019. Once the date is passed, there is no chance the clock can be turned back.
2019 will likely be marked out as the year when our present relationship with the rest of Europe changes once again, albeit not, this time, to align our calendars.
As time is limited please call TLA Business Services today on 01905 21411