Many of us are aware of the UK’s unique tax year, which for historical reasons runs from 6th April in a given year to the following 5th April.
A recent report published by the Office for Tax Simplification has suggested that the tax year instead moves to synchronise with the calendar year, so from 1st January to 31st December, or else to end on 31st March, in line with a number of other countries. The aim here is to tie in the tax year with many business’s accounting year dates, to make reporting smoother and more efficient.
But of course the upheaval from the changes would be rather great, especially if the move to the calendar year were the chosen option. Taxpayers, employers, businesses, advisors and government bodies would all need to deal with the changes in theory and practice and so the OTS will look at the pros and cons of the move in a fuller report, due in the summer.
And are there any precedents for this? Well, aligning with the introduction of the euro in 2002, Ireland moved from the traditional tax year to a calendar year model – without too much upheaval. Will we be next?