The UK tax year for self employment and personal tax runs from 6th April to the following 5th April. An unusual set of dates considering most countries run from 1st January. Ever wondered why the UK tax year starts on 6th April? Let me try to explain…
You can watch this video about this article here:
A long time ago
We’re pretty used to New Year’s Day being on the 1st January but it hasn’t always been like that. A long time ago the UK used to celebrate New Years Day on the 25th March. This was exactly 9 months before the Virgin Mary would give birth to Jesus Christ on Christmas Day, or 25th December. This was known as ‘Lady Day‘.
At that time we were using the Julian Calendar, named after Julius Caesar, and that had been in use since 42BC. As a result taxes were collected from the 25th March to the following 24th March.
The Julian Calendar
The Julian Calendar assumed there were 365.25 days in a year. Add a leap year every 4 years and everything is grand. Yes? Well, not quite. A year is actually 365.25 days… minus 11 minutes. This calendar drift can turn in to quite a serious problem.
- In the Julian Calendar 1 year is 365.25 days BUT
- One year is actually 365.242189 days
The Gregorian Calendar
So in 1582 Pope Gregory VIII introduced the Gregorian Calendar with a few new rules to fix the calendar drift. It was decided that:
- If the year is exactly divisible by 100 it WON’T be a leap year
- If the year is exactly divisible by 400 it WILL be a leap year
- So in the Gregorian Calendar one year is 365.2425 days
This new calendar was pretty accurate in the scheme of things with only 0.000311 days of drift per year (about 26 seconds).
The UK caught up… 200 years later
So for whatever reason the UK didn’t adopt the Gregorian Calendar until 1752, almost 200 years later. By this time we were out of sync by 11 days, and this was a bit of a problem. So we just chopped a few days out. In 1752 we literally skipped 11 days.
- Wednesday 2nd September was followed by
- Thursday 14th September
BUT of course the UK government didn’t want to miss out on 11 days of tax revenue. So 11 days were added on to the end of the tax year taking it from 24th March to the 4th April.
Everything was fine until the year 1800 which, under the Julian Calendar, would have been a leap year. However under the Gregorian Calendar it’s not a leap year (since it isn’t divisible by 400). Once again the UK government didn’t want to miss out on a day of tax revenue, so an extra day was added on to the end of the tax year. This brought it to the tax year we know and love where it ends on 5th April.
- Old Lady Day = 25th March
- New Lady Day = 6th April
- Most developed countries run their tax year from the 1st January
- The UK government’s own internal financial year starts on 1st April
- In Ireland Lady’s Day is on 15th August
Go figure!? What do you think? Have you heard a different theory about this? Chat about it more over on Twitter @smallbusinesstb
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