When does the tax year end?

In the UK, the tax year doesn’t follow the calendar year. It’s a financial period that runs from April 6th to April 5th of the following year. This schedule is a holdover from a major historical event and is a crucial detail for anyone managing their finances, from individuals to small business owners.

Here at React Accountancy, we want to help you understand why this date is so important and what you should be doing before it arrives.

The reason for the UK’s unique tax year end dates back to 1752. This was the year Britain adopted the Gregorian calendar, which was already widely used throughout  Europe. Before this, we used the Julian calendar and the change required an 11-day correction to realign with the seasons, meaning September 2nd was followed by September 14th.

At the time, the financial year started on March 25th. To avoid a loss of 11 days’ worth of tax revenue, the government simply extended the 1752 tax year by 11 days, shifting the end date to April 5th. This date has remained the same ever since.

For a comprehensive guide,  this calendar can help visualise the difference between the tax year, the calendar year, and the financial year.

What are the key financial actions individuals and businesses should take before the tax year ends on April 5th?

The end of the tax year is a critical time for financial housekeeping as it’s your last chance to take advantage of various tax allowances and reliefs that reset on April 6th. Here are some of the most important things to consider:

Maximise Your ISA Allowance: The Individual Savings Account (ISA) allowance for the 2024/2025 tax year is £20,000. This is the total amount you can save or invest across various ISA types (Cash, Stocks and Shares, Lifetime, etc.) without paying tax on the interest, dividends, or capital gains. If you don’t use your full allowance by April 5th, you lose it. The new allowance for the 2025/2026 tax year starts on April 6th.

Make Pension Contributions: Contributing to your pension is a great way to save for retirement and reduce your tax bill. You get tax relief on contributions, up to your annual allowance, which is £60,000 for the 2024/2025 tax year. You might also be able to “carry forward” any unused allowance from the previous three tax years, but you have to use the current year’s allowance first. April 5th is your last chance to make these contributions and claim the tax relief for the current year.

Utilise Your Capital Gains Tax (CGT) Allowance: If you sell an asset (like shares or a second home) at a profit, you may have to pay Capital Gains Tax. Everyone has an annual exempt amount, which is £3,000 for the 2024/2025 tax year. This allowance cannot be carried forward. If you’re planning to sell assets, doing so before April 5th can help you use your annual allowance and reduce your potential tax bill.

Claim All Eligible Expenses: For self-employed individuals and landlords, it’s essential to ensure you’ve claimed all your eligible business expenses for the year. Keeping meticulous records throughout the year is key, but the end of the tax year is the final opportunity to review your records and make sure you haven’t missed anything.

Review Your Tax Code: Your tax code determines how much tax your employer deducts from your salary. The end of the tax year is a perfect time to check your P45 or P60 to ensure your tax code is correct. An incorrect code could mean you’ve been paying too much or too little tax, and it’s best to address any issues with HMRC promptly.

What are the key tax deadlines for individuals and businesses to keep in mind, in addition to the tax year end on April 5th?

While the tax year ends on April 5th, there are other important deadlines you need to be aware of:

31st January: The deadline for online Self Assessment tax returns and for paying any tax you owe for the previous tax year.

31st October: The deadline for paper Self Assessment tax returns.

5th October: The deadline to register for Self Assessment if you’re newly self-employed or have other income to declare.

Missing these deadlines can result in fines and penalties from HMRC, so it’s vital to stay organised.

How React Accountancy can help

Navigating the complexities of tax law can be daunting however, here at React Accountancy, we specialise in helping individuals and businesses manage their finances and stay compliant with HMRC regulations. Our expert team can assist with:

Proactive Tax Planning: We can help you strategically plan your finances throughout the year to make the most of all available tax reliefs and allowances.

Self Assessment: We can handle your tax returns for you, ensuring they’re accurate, submitted on time, and that you’re claiming all the expenses you’re entitled to.

Record Keeping: We can help you implement efficient record-keeping systems to make tax season stress-free.

The end of the tax year is a crucial milestone for your financial well-being. By understanding the key dates and taking proactive steps, you can ensure you’re in the best possible position to manage your tax affairs and build a secure financial future.

Why choose React Accountancy?

Here at React Accountancy, we provide trusted accountancy services to start-up, established and multi-national businesses across a diverse range of industries.

From the moment you get in touch, our approachable, friendly and professional team will go above and beyond to ensure that you receive the right advice, support and accountancy solutions for your business.

All of our team has years of experience in providing accountancy services that support your business including complex financial issues.

Get in touch today for further information about any of our services.

You can reach us on 01914324110 or contact us via email using info@reactaccountancy.co.uk

Who are React Accountancy?

REACT Accountancy is a local accounting company who specialise in providing qualified and professional accounting services. We should always be your first choice as we take pride in providing all of our customers with a top quality service, not only will we meet your requirements, we’ll exceed them.

Should you be looking for a regular accountant or its a one off service, make sure that you call on the services from our professional accountancy team today. We can also provide free quotes.

We provide our services across Manchester, Stockport, London, Birmingham, Cardiff, Bristol, Glasgow, Leeds, Nottingham, Leicester, Edinburgh, Sheffield, Bradford, Coventry, Liverpool and Belfast.

Links

https://reactaccountancy.co.uk/financial-year-end-checklist/

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

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