The UK Office of Tax Simplification (OTS) has recently published a review setting out its analysis of the benefits, costs and wider implications of a change to the date of the end of the tax year for individuals.

The review considers the high level implications of moving the tax year end date to 31 December and a more detailed evaluation of the implications of a move to 31 March. It also considers potential short term practical measures to facilitate the launch of Making tax Digital for Income Tax.

Bill Dodwell, OTS Tax Director said:

It’s been stimulating to explore this issue, which has been of long-standing interest to many given the curiosity aroused by the UK’s use of a tax year running from 6 April to 5 April. Despite our having carried out our review over a short period, many people have got in touch to share their insights and experience. A clear majority of those responding to us thought that the UK should adopt a different year end – but there was a range of views on whether to move to 31 December or to 31 March. This has been borne out by a range of surveys.

This report presents information and analysis to inform evaluation and debate about the implications of any potential change and its timing. It does not aim to make a specific recommendation about whether the tax year should change.

There would be clear advantages from having a different tax year end date, but as the transitional costs and impacts are significant, it would require detailed advance planning. If government were to make a change, it would also be important to ensure the timing did not derail existing change programmes such as work on the Single Customer Account. So, while we do not consider such a change should take place in the immediate future, it is not too early to start some long-term planning if the government were to consider taking this forward.

In the short-term, we recommend government and HMRC focus on arrangements to allow self-employed taxpayers and individual landlords to use 31 March in place of 5 April when reporting their income, to facilitate Making Tax Digital for Income Tax.

Download the report

Comments are closed.