The Office of Tax Simplification (OTS) has released a report entitled 'The UK tax year-end date: exploring the potential for change'. This report explores the benefits, costs and wider implications of a change to the UK's year-end tax date. 

The report builds on the OTS's earlier ‘Potential for moving the end of the tax year – Scoping document’ released in July and summarises the high-level implications of moving the tax year-end to 31 March and 31 December.

The OTS found that:

  • 5 April is not an intuitive date, modern systems and society increase the need for a more intuitive year-end cut off date.
  • A change of date could help simplify the tax system.
  • Making Tax Digital for Income Tax could lead to individuals with relatively simple tax affairs having to make a large number of different reports. A self-employed individual with a rental property could need 11 Income Tax reports a year compared to the current requirement to complete a single annual tax return.
  • While a move to 31 March would be more intuitive, a 31 December year-end would be the simplest design for everyone to understand.
  • A move to 31 December would have more benefits than a move to 31 March, but the costs and disruption would be higher.
  • International data sharing (such as the Common Reporting Standard) runs to 31 December, this information would be easier for HMRC to process if the tax year ran to the same date. A large number of the G20 also run their tax years to 31 December.
  • There would be significant costs to changing the year-end including:
    • Significant consumption of government and private sector resources in changing legislation and systems (including PAYE, pensions, financial institutions etc).
    • A transitional year between the new and old regimes would be required.
    • Significant lead time should be built in to aid any transition and to allow for consultation and publicity.
    • The UK financial year could also require changing which would be a significant undertaking.

The OTS recommendations include:

  • Any changes should not take place in the immediate future.
  • It would not be practicable to change the date prior to the launch of MTD for Income Tax.
  • HMRC should pursue ways to formalise arrangements allowing taxpayers to use 31 March rather than 5 April for self-employed and property profits.

Useful guides on this topic

Should we change the end of the Tax Year?
The Office of Tax Simplification (OTS) has issued a policy paper ‘Potential for moving the end of the tax year - Scoping document’. It offers two options to replace 5 April as the end of the tax year, 31 March or 31 December. 

Making Tax Digital
An index of our MTD content.

Making Tax Digital: Survival guide (for the self-employed & landlords)
This is a freeview 'at a glance' guide for the many self-employed taxpayers, company owners and property landlords who are unaware of HM Revenue and Custom's radical plans to transform the tax online filing system. 

Making Tax Digital for VAT
This is a freeview 'At a glance' guide to Making Tax Digital for VAT. 

External Links

The UK tax year-end date: exploring the potential for change

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