On 8 June 2021 it was reported that the UK’s Office for Tax Simplification (OTS) is to begin a review of the costs and benefits of moving the UK’s tax year end from 5 April to either 31 March or 31 December.
The OTS has issued a review scoping document confirming that a report will be issued later in 2021 looking at the implications of the move. The assessment will consider financial and administrative costs that might be involved for the taxpayers and businesses, practical issues for HMRC systems and the effect of the move on tax avoidance and evasion.
In addition to looking at the tax simplification issues, the review would also look at the implications of any change in other areas such as tax credits and benefits.
Move to 31 March year end
The review is to focus mainly on moving the year end to 31 March, a date that is close to the current year end of 5 April. This would align the tax year end with the UK’s financial year end.
In addition. the OTS review would also consider any alternative approaches that may be available to address the practical issues arising from the current to 5 April tax year end.
Move to 31 December year end
The OTS will also consider generally the issues involved in a move to a 31 December year end. If this date is adopted as the tax year end the UK would be in line with countries such as France, Germany, Ireland and the US. The experience of other countries with their tax year end will be considered by the OTS in the review.
