Why does the tax year begin on the 6th of April, rather than the more logical 1st of January? It's a question that may have crossed the minds of many British taxpayers, and the answer lies in a fascinating historical tale ...
Why Does The Tax Year Start On The 6th Of April? A logical question with an interesting answer!
The tradition of the tax year beginning on the 6th of April dates back to the 18th century, when the British Empire was still using the Julian calendar. This calendar, which was introduced by Julius Caesar in 46 BC, had a slight miscalculation in its system, causing it to fall behind the solar calendar at a different rate.
"By 1752, the British calendar was 11 days behind the rest of Europe, creating a discrepancy in the dates!"
To address this issue, the Government of the time made the decision to switch to the Gregorian calendar, which was already being used by most of Europe. This meant that the British people had to go to bed on the 2nd of September 1752 and wake up the next morning on the 14th of September 1752, skipping 11 days in the process.
This change fixed the calendar issue, but also caused protests across the country. Why were they expected to pay a full year of taxation, even though they'd just lost 11 days of their lives?
Prior to the calendar change, the tax year in the UK traditionally began on the 25th of March, which was known as 'Lady Day'. This date, along with three other quarter days, were seen as important dates for business transactions, such as paying rent and hiring servants. However, with the switch to the Gregorian calendar, the tax year would now be 11 days shorter, resulting in a loss of revenue for the Treasury.
To avoid this loss, the British government decided to keep the tax year at its usual length of 365 days, and end it on the 4th of April 1753. This meant that the following tax year would begin on the 5th of April, and this date remained the start of the UK tax year for a number of years.
"But the story doesn't quite end there as in 1800 another problem arose!"
The year 1800 was not a leap year in the Gregorian calendar, but it would have been in the Julian system. This meant that another day was lost, and to address this, the start of the UK tax year was moved from the 5th of April to the 6th of April. And that is how the 6th of April became the official start of the tax year in the UK.
So, while the date may seem random and illogical, it actually has a rich historical significance. The 6th of April marks the end of the old tax year and the beginning of the new one, and it is a date that has been ingrained in British culture for centuries.
Another interesting fact about the UK tax year is that it is not aligned with the calendar year, unlike many other countries. This means that taxpayers have to keep track of two different dates when it comes to their finances – the 6th of April for the tax year and the 1st of January for the calendar year. This can sometimes cause confusion and make financial planning a bit more complicated, but it is a unique aspect of the British tax system.
There are also some practical reasons for why the tax year begins on the 6th of April. For one, it allows for a more accurate calculation of taxes, as it falls after the end of the financial year for many businesses. It also gives the government enough time to process tax returns and make any necessary adjustments before the start of the new tax year.
In addition, starting the tax year in April gives individuals and businesses a few months to prepare for any changes in tax rates or laws that may come into effect. This allows for a smoother transition and gives people time to adjust their finances accordingly!
So, while the 6th of April may seem like an odd date to start the tax year, it is a tradition that has stood the test of time. It has its roots in history and has proven to be a practical and efficient way of managing taxes in the UK.
As the new tax year is about to begin, taxpayers can take comfort in the fact that the date has a significant meaning and is not just some random choice.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about why the 6th of April is the start of the tax year, it may be a great idea to call me on 01908 774320 and let's see how I can help you.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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