The Office of Tax Simplification (OTS) is set to explore the benefits, costs and wider implications of changing the date of the end of the tax year for individuals.
The review will focus on the implications of moving the tax year end date from 5 April to 31 March or 31 December.
The UK’s tax year for individuals currently runs from 6 April to the following 5 April. This is for historical reasons and has been the case for hundreds of years; the UK’s modern tax system and infrastructure have been developed around this date.
The OTS said: ‘By contrast, accounting systems used by businesses have been developed around month and quarter ends. Across businesses and internationally, it is common to account to a month end date.
‘Many countries use 31 December for their government accounts and the two most popular accounting dates for multinationals are the calendar year end date of 31 December and 31 March. The UK financial year for government accounting and for companies runs from 1 April to 31 March.’
The OTS is now undertaking a review to analyse the costs and benefits of changing the date of the tax year end and will publish a report over the summer of 2021.
While primarily addressing tax simplification issues, the review will also take account of the implications of any change in other areas, such as in relation to tax credits and benefits.