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It’s time to take a look at the tax year end

23 February: Writing in the Financial Times, the Tax Faculty’s Anita Monteith explored why the UK’s policymakers need to consider moving the start of the tax year and bring it in line with other countries.

In a column published on 17 February, Monteith outlined the historic reasons as to why the UK’s tax year starts on 6 April – which predate the adoption of the Gregorian calendar in 1582 – before discussing why it’s the right time for change.

Alongside the government’s stated desire to “build back better”, using the fundamental changes brought about by the coronavirus pandemic to rethink outmoded policies and business practices, the UK has a 10-year strategy to modernise its tax administration system, embracing digital technologies wherever possible.

To deliver these goals then some radical changes need to be made and shifting the end of the UK’s tax year to 31 December could provide a way to not only simplify processes for taxpayers and the authorities, but also provide the benefit of international alignment.

She explained: “Individuals and businesses transact across borders all the time but it is unnecessarily cumbersome to have to deal with non-aligned tax jurisdictions. Added complexity means more time, more mistakes and generally increased compliance cost. The US, France, Germany, Spain, Ireland and even Jersey (a British dependency) all use calendar years.”

While acknowledging that such a shift will inevitably have an impact on tax receipts for one financial year, such moves are possible. Ireland did so in 2002 when it joined the Euro.

She goes on to highlight the differences in the quarterly reporting dates in requirements of Making Tax Digital (MTD) for VAT and MTD for income tax and argues that the inconsistencies risk confusion.

She concludes: “Digital filing and online communication are just the first steps. We also need a tax system ready to align with the rest of the world as business itself moves online.”


This article contains extracts from “Why can’t the UK tax year start on January 1” published on ft.com on 17 February and have been reproduced with permission from the Financial Times.