Why the UK tax year begins on April 6 (it’s a very strange tale)

You have to go back to medieval times

Jane Frecknall-Hughes
Wednesday 06 April 2016 14:10 BST

You might think, logically, that the beginning of the tax year would coincide with the calendar year – and in some countries it does. In the UK, however, the scramble to get your affairs in order comes to its conclusion on April 5, with the new tax year starting on April 6. To understand the reason for this apparently random date, you have to go back to medieval times.

In England and Ireland, the New Year used to start on March 25, also known as “Lady Day” in commemoration of the angel Gabriel’s announcement to the Virgin Mary that she would become the mother of Jesus Christ. Along with Midsummer on June 24, Michaelmas on September 29, and Christmas Day on December 25, Lady Day was one of the four most important days in the religious calendar. All accounts, including debts and rents, had to be settled by these so-called “quarter days”, and Lady Day was the first, gradually becoming regarded as the start of the financial year (although the precise reason for this remains unknown).

The move forward to April 6 results from changes to the calendar and the actual number of days in various years. Until 1582, Europe had used the Julian calendar established by Julius Caesar. Under the Julian calendar, the year had 11 months of 30 or 31 days, with one month, February, consisting usually of 28 days but with 29 every fourth or “leap” year. This had worked well for centuries, but because it did not align exactly with the solar calendar (the time it takes for the Earth to move round the sun), over time problems developed.

Playing catch-up

The Julian year was only 11½ minutes longer than a solar year, but by the late 1500s, this had all added up and the Julian calendar was some ten days adrift from the solar calendar. The Roman Catholic church was especially concerned because the celebration of Easter had been gradually getting later than when it had been celebrated by the early church.

And so in October 1582 Pope Gregory XIII instituted a change (to the “Gregorian” calendar) to solve the problem: three leap days were omitted every 400 years by the authority of a papal bull known as “Inter Gravissimas”. While Europe adopted the Gregorian calendar, however, England, with its history of conflict with the Roman Catholic church, did not (nor did Russia), and continued with the Julian calendar.

By 1752, when it was 11 days out of alignment with the rest of Europe, England finally accepted that it would have to make a change. The decision was made to drop 11 days from the month of September to catch up, and so September 2 was followed by September 14 that year. To ensure that there was no loss of tax revenues, however, the Treasury extended the 1752 tax year by adding on the 11 days at the end. Consequently, the beginning of the 1753 tax year was moved to April 5.

In 1800 a further adjustment was made, shifting the start of the tax year forward by one more day to April 6, once again to mitigate for the differences between the Julian and Gregorian calendars. The year 1800 would have been a leap year under the Julian calendar system, but not the Gregorian one, so the Treasury treated 1800 as a leap year for purposes of taxation to get an extra day’s revenue. April 6 has remained the beginning of the tax year ever since, though it was only formalised in 1900. Although some countries, including the US, Canada, France and Germany, have adopted the calendar year as their tax year, the UK and others such as Australia have not.

Another oddity is the UK government’s own financial year, which runs from April 1 to the following March 31, and so does not coincide with the tax year, although 1 April to 31 March is also the fiscal year for corporation tax. The reason for this is less clear than why April 6 was adopted as the start of the tax year – and is perhaps a tale for another day.

Jane Frecknall-Hughes, Professor of Accounting and Taxation, University of Hull

This article was originally published on The Conversation. Read the original article.

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