Adopting a tax year which is either aligned with the calendar year or with a calendar month-end would have clear benefits, according to a review from the Office of Tax Simplification (OTS).
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 (MTD for IT).
Bill Dodwell, Tax Director at the OTS, said: ‘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.’