Tax Year End – Why April 5th?
You might think 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 financial affairs in order comes to an end on April 5th, with the new tax year starting on April 6th. To understand the reason for this apparently random date, you have to go back in history to medieval times.
It all began in 1582 when Pope Gregory XIII ordered a change of calendar from the Julian (named after Julius Caesar), which had been in use since 42 BC.
The Julian calendar, which consisted of eleven months of 30 or 31 days and a 28-day February (extended to 29 days every fourth year), was actually quite accurate. After centuries though, even a small inaccuracy adds up. By the 1500s it had put the Julian calendar behind the solar calendar by 10 days.
However, Elizabethan England like many Protestant countries of the time initially objected to adopting a Catholic innovation; some Protestants even feared the new calendar was part of a plot to return them to the Catholic fold! This lack of change in 1582, meant there was a difference of 10 days between the calendar in Britain and the rest of Europe.
By 1752 British realised that something must be done, the difference had increased to 11 days (one calendar had a leap year in 1600, the other did not), and they therefore changed to the Gregorian calendar.
Until this change in 1752, both the New Year AND the tax year used to start on March 25th, also known as “Lady Day” in England and Ireland. It was one of the four most important days in the religious calendar along with Midsummer on June 24th, Michaelmas on September 29th, and Christmas Day on December 25th. All financial accounts, including debts and rents, had to be settled by these so-called “quarter days”, and as Lady Day was the first of the year, it gradually became regarded as the start of the financial year too.
In order to ensure no loss of tax revenue, the British Treasury decided that the taxation year which started on 25th March 1752 would be of the usual length (365 days) and therefore it would end on 4th April 1753, the following tax year beginning on 5th April.
The next difficulty was that 1800 was not a leap year in the new Gregorian calendar but would have been in the old Julian system. Therefore the Treasury moved the year start again, this time from 5th to 6th of April, and this date has remained unchanged ever since.