In a sensible world, the tax year would coincide with the normal calendar year. Imagine…no more peering at receipts, statements and invoices trying to figure out which tax year that slip of paper from 2013 actually belongs to. Bliss!
You might even think the inconsistency is part of a conspiracy by accountants to keep them in business. Of course it’s not, so why isn’t the end of the tax year December 31st?
The truth is that until 1752, Britain used the Julian calendar, established in Roman times. By then, this was 11 days adrift of the more accurate Gregorian calendar that was used across Europe. It was time for a change.
According to the old calendar, New Year’s Day (and the start of the tax year) was the 25th March, around the time of the Spring Equinox. The tax year starting the 25th March 1752 was extended to 365 days plus the ‘missing’ 11 days, giving an end date of the 4th April 1753.
In 1800, a further day was added to allow for what would have been a leap year in the old system. That’s why the tax year now ends on the 5th April.
Even though taxes will always be with us, you can keep more of your hard-earned money through a range of tax-efficient investments. For more information, contact your Legal & Medical financial adviser.
This article was written by Mark Williams, Octopus Business Line Manager (IHT) at Octopus Investments