The Office for Tax Simplification (OTS) has set out the scope of a review into the benefits, costs and wider implications of changing the date of the end of the tax year for individuals from 5 April to 31 March, or potentially to 31 December. The OTS’s report is due to be published over the summer of 2021.
The policy paper explains that the UK's tax year for individuals currently runs from 6 April to 5 April for historical reasons and that the UK's modern tax system and infrastructure have been developed around this date. This contrasts with accounting systems used by businesses and governments, which commonly use month and quarter ends. The UK financial year for government accounting and companies ends on 31 March, whilst many countries, including the US, France and Germany, use 31 December.
The OTS has commenced this review in the context of HMRC's call for evidence on reforming the tax administration framework.
The review will focus on the implications of moving the tax year end date to 31 March, as well as considering potential alternative ways to deal with practical issues arising from the tax year ending on 5 April. There will also be an outline of the broader issues that would need to be considered were the end of the tax year to be moved to 31 December.