When does the new tax year start

For individuals and businesses across the UK, there’s one date that marks a financial reset and the beginning of a new chapter – the start of the tax year. But unlike the calendar year which begins on January 1st, the UK tax year follows its own unique rhythm.

So, when exactly does the new tax year start, and why does this peculiar date hold such significance? Within this blog post, we have included all the dates that should be on your radar when it comes to navigating the financial calendar.

The magic date: April 6th

The UK tax year always begins on April 6th and ends on April 5th of the following year. This means the current tax year, for example, runs from 6th April 2025 to 5th April 2026 and this consistent cycle is crucial for all forms of financial tax planning, from personal savings right through to business accounts.

Understanding this date is the first step in effective financial management. It’s the day when your new Personal Allowance and other tax-free allowances for things such as capital gains and dividends are refreshed. It’s the starting point for tracking your income for the next 12 months, whether you’re a PAYE employee, a sole trader, or a company director.

More than just a date: What happens on April 6th?

The start of the tax year is far more than a simple change of date on the calendar. It’s a critical moment for a number of financial activities:

New Tax Rates and Allowances: Any changes to Income Tax rates, National Insurance contributions,Personal Allowances, or tax reliefs announced in the Budget often come into effect on April 6th. This is when a new tax code might apply, or new thresholds for higher-rate tax payers are introduced.

A Fresh Start for Savings: Your annual ISA allowance, which allows you to save and invest tax-free, resets and this is the perfect time to review your savings strategy and make the most of your tax-efficient wrappers.

Business Accounting: For many businesses, particularly sole traders and partnerships, the tax year dictates their reporting period for Self Assessment. All income and expenses for the 12 months from April 6th must be accurately recorded to prepare for the January tax return deadline.

Employee Payroll: Employers use the start of the new tax year to update their payroll software with the latest tax codes and National Insurance rates, ensuring that the correct deductions are made from employee salaries.

The baffling history of April 6th

For many, the April 6th date seems random and out of sync with other financial and accounting periods. Why not simply align it with the calendar year (January 1st) or the financial year (April 1st)? The answer lies in a fascinating slice of British history.

The story goes back to the mid-18th century. Before 1752, Britain used the Julian calendar. The tax year began on March 25th, which was known as ‘Lady Day’ and was a traditional quarter day for settling debts and rents. However, by this point, the Julian calendar was out of sync with the solar year, and most of Europe had already switched to the more accurate Gregorian calendar.

In 1752, the UK finally made the change. To catch up, 11 days were skipped, with September 2nd being immediately followed by September 14th. This monumental shift in time created a potential problem for the government –  a loss of 11 days’ worth of tax revenue. To ensure the tax year still contained a full 365 days, the start date was moved forward by 11 days, from March 25th to April 5th.

Fast forward to 1800, which was a leap year under the old Julian calendar but not under the new Gregorian one. To avoid losing another day of tax revenue, the government adjusted the start date once more, pushing it forward by a single day to April 6th. And so, the tradition was born, and it has remained the start of the UK tax year ever since.

Why this still matters today

While the historical reasons are no longer relevant to our modern lives, the April 6th date remains a cornerstone of the UK’s tax system. For accountants and financial advisors, it’s a date that signals the start of a busy period of financial review and planning.

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https://reactaccountancy.co.uk/tax-strategies-for-year-round-planning/

https://reactaccountancy.co.uk/how-to-create-and-stick-to-a-budget/