OTS to consider ‘benefits and implications’ of moving tax year end date
The Office for Tax Simplification (OTS) will explore whether there is a case for moving the UK’s tax year end date.
Announcing the review, the office, which provides independent advice to HM Revenue & Customs (HMRC), suggests that aligning the tax year end with the financial year end could reduce financial and administrative burdens for taxpayers.
The UK’s tax year end currently runs from 06 April to the following 05 April due to “historical reasons” and has been the case for “hundreds of years”, said the OTS.
But most modern accounting systems used by businesses have been developed around month and quarter ends. For example, the two most popular accounting dates for multinationals are the calendar year end date of 31 December and 31 March. The UK financial year end for companies also runs from 1 April to 31 March.
In the review, the OTS said it will explore the benefits, costs, and wider implications of moving the tax year end date from 5 April to 31 March – effectively shortening the first tax year under the change by five days.
The review will also consider the impact of changing the tax year end date to 31 December – the day currently used by tax regimes including the USA, France, Germany, Ireland (who changed its year end date in 2002 after adopting the Euro), and even Jersey, a British dependency.
The OTS has indicated the outcome of the review will be published this summer and passed to HMRC for consideration.
The announcement comes after the Institute of Chartered Accountants in England and Wales (ICAEW) suggested in February that post-Covid recovery was a “good time” to move away from the 05 April tax year end date.
We will keep you updated on the outcome of the OTS review. In the meantime, if you or your clients require advice or support with tax matters including year-end compliance, please get in touch with us.