To many people, it makes perfect sense to align the tax year with the calendar year. In fact several countries, including Austria, Brazil, China, Germany, Ireland, Japan and Switzerland, have chosen a tax year end of 31 December. So why does the UK tax year end on 5 April?
Until 1752, the tax year started on 25 March, which was New Year’s Day according to the old style Julian calendar. Named after Julius Caesar, the Julian calendar had been in use since 42 BC. The calendar broadly consisted of eleven months of 30 or 31 days and a 28- or 29-day February: it was really very accurate.
Over centuries, however, small inaccuracies added up and by the 1500s the Julian calendar was behind the solar calendar by 10 days. In 1582, therefore, Pope Gregory XIII ordered a change of calendar to the new Gregorian calendar. The Gregorian calendar, still widely in use today, accounted for a 0.002% correction in the length of the year.
Great Britain eventually made the change to the Gregorian calendar in 1752, by which time the difference between the calendar here and the rest of Europe had increased to 11 days. In order to ensure no loss of tax revenue, the Treasury decided that the tax year that started on 25 March 1752 would be of the usual length (being 365 days). The year would, therefore, end on 4 April the following year, with the new tax year starting on 5 April.
The next difficulty was that 1800 was not a leap year in the new Gregorian calendar, whereas it would have been in the old Julian calendar. The Treasury therefore moved the start of the tax year once again, from 5 to 6 of April, and this date has (thankfully!) remained unchanged ever since.