Chris Thompson delves into history to understand why the UK fiscal year commences on 6 April.
When we take the opportunity to take a step back and think, this often leads us to question the status quo and the world we live in. Perhaps unlikely to be top of your thought list, but a particularly pertinent question nonetheless is, why does the UK tax year start in April?
Wouldn't it simpler to match the financial year to the calendar year commencing on 1 January? Why does it start on such a random date in April? As we explore in this blog post there is good historical reason and logic to this, it's all to do with the accuracy of calendars, religion, and farming.
When does the tax year start? When does the tax year end in the UK?
The UK tax year is different to the calendar year, it starts on 6 April and ends on 5 April of the following year. This is also referred to as the fiscal, or financial year.
Why does the tax year start on 6 April? A bit of history
Until 1752, the new year in England didn't begin in the middle of Winter on the first day of January. The calendar year was aligned to the seasons meaning it began on the Spring Equinox, also known as lady day, as part of the then Julian calendar. Lady day commemorates the archangel Gabriel's announcement to Mary that she would give birth to Christ. The Spring Equinox is 25 March when the length of day and night are the same.
The Equinox was one of the four quarter days when rents were paid, accounts were due, and school terms commenced. It fell between ploughing and harvesting for farmers meaning this was the date for starting long term contacts between farmers and landowners. For this very reason it was also the beginning of the new year and, the tax year.
In 1582, Pope Gregory XIII introduced the Gregorian calendar which used a solar dating system, in place of the Julian calendar. The reason for this was the Julian calendar calculated the year at 365 and a quarter days with a leap day every 4 years. This resulted in an inaccuracy in the measurement. The solar year actually took 365 days, 5 hours, 48 minutes, and 45.25 seconds. This error meant the calendar dates of the seasons regressed by one day per century.
The Gregorian calendar addressed this imbalance as no century year can be a leap year unless it is divisible by 400, and later 4,000. Within a year, some of Europe had adopted it, as did Scotland in 1600, which at that time was independent of England.
Protestant England refused what was considered at the time to be a Catholic concept. The result, was this led to the complexity of people having to use both calendars when trading with Scotland and the continent.
By 1751, Parliament had recognised these issues and the need to harmonise with Scotland (which had become part of the United Kingdom in 1707), and the rest of Europe. The Calendar Act followed switching the UK from the Julian, to the Gregorian calendar. Consequently, the new year now began on 1 January.
The tax issues that arose from switching to the Gregorian calendar
The switch meant 1751 became a short year, running from March to December. Furthermore 11 days had to be corrected to align the calendars. Wednesday 2 September was to be followed by Thursday 14 September 1752 meaning the 11 days in between were lost.
However, taxes and rents were still due on the equinox and were expected to be paid in full! People had lost 11 days and felt hard done by this. The solution therefore was to delay the start of the tax year by 11 days to 6 April. It still stands to this day!
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