Just in case this question comes up for you over Christmas: Trivial Pursuits? Here’s why we have our tax year for income tax purposes set as the 5th April.
According to HMRC the reason for the tax year running from 6 April to 5 April is primarily historical and has its origin in the switch from the Julian to the Gregorian calendar in 1752.
It had been calculated in the 16th Century that the Julian calendar had lost 9 days since its introduction in 46 BC. Most of Europe changed to the new, more accurate, Gregorian calendar in 1582, but this country continued with the old one until September 1752 by which time the error had increased to 11 days.
These 11 days were ‘caught up’ by being removed from the calendar altogether – 2 September was followed by 14 September. In order not to lose 11 days’ tax revenue in that tax year, though, the authorities decided to tack the missing days on at the end, which meant moving the beginning of the tax year from the 25 March, Lady Day, (which since the Middle Ages has been regarded as the beginning of the legal year) to 6 April.
The dates were adopted for income tax on its re-imposition in 1842 and have not changed since.
It’s interesting that the tax year for businesses subject to corporation tax finishes at the end of March, how sensible. Should we perhaps be lobbying for the following clause to be added to the Finance Bill 2015:
“That the tax year for income tax (and other affected taxes) for the year of assessment 2014-15 be reduced by 5 days to end on 31 March 2015, and that all future tax years will end on the 31 March.”
Of course, this means that George, or his successor, will lose 5 days of revenue in 2014-15, although with tax receipts reducing perhaps this is no big deal.