So why does the UK tax year end on 5th April?

It all started a long, long time ago…...

We were all using the Julian calendar, named after Julius Caesar so this was a system adopted in 45 BC. Although this calendar was reasonably accurate it differed from the solar calendar by 11 ½ minutes each year which was no big problem as far as Julius Caesar was concerned and in fact was not a problem for many years after his death. However by 1582 it had built up to be 10 days out of sync with the solar calendar and Pope Gregory X111 decided a change was necessary. So he introduced the aptly named Gregorian Calendar which reduced the length of a calendar year from 365.25 days to 365.2425 days…In effect a reduction of 10 minutes and 48 seconds per year.

The slight problem with this was that although introduced into various European countries the British decided not follow suit and continued using the Julian Calendar …for another 170 years …by which time the two calendars were 11 days apart. Finally the British decided something had to be done and so changed to the Gregorian calendar on

2nd September 1752 with the following day becoming the 14th September but the Treasury realised that this would create a problem because they would lose 11 days worth of tax and that was something they were not prepared to do…sounds strangely familiar doesn’t it?

So under the old Julian Calendar, the tax year in Britain began on 25th March. This was the first Christian Religious holiday of each year known as Lady Day (when Gabriel told the Virgin Mary that she would become the mother of Jesus Christ. and so for the British was the start of the “New Year”. So in order to get 365 days of revenue the tax year was extended so it ended on 4th April 1753 and so the new tax year would start from 5th April thereafter. However 1800 was a problem year. Under the old Julian system the year 1800 would have been a leap year but with the Gregorian calendar it was not so again the Treasury looking for an extra day of tax extended the tax year so it ended on 5th April and began on 6th and so it has remained ever since.

All other “enlightened” economies have switched to a 1st January start to their new tax years but the British have held onto this rather quirky tax year which is solely used for personal tax. Corporation tax bizarrely does use a 1st April as its start date.