Tax Year Not April To April?

If you are self-employed or have a partnership, but your Tax Year does not run from 6th April to 5th April the following year, you are subject to the changes with Basis Period reform.

HMRC have an online transition calculator for free and additional guidance which you can access online here https://www.gov.uk/guidance/work-out-your-transition-profit#get-help-to-work-out-your-transition-profit?&utm_source=t.co_hmrcgovuk&utm_medium=socail&utm_campaign=basisperiodreform

The tax year in the United Kingdom, including the Isle of Man, historically followed various formats before settling on the April-to-April system. Here’s a brief timeline of how the tax year evolved:

1. 1752: Prior to 1752, Britain and its territories followed the Julian calendar, which began on Lady Day (25th March). This meant that the year started on 25th March and ended on 24th March the following year.
2. 1752 Transition to Gregorian Calendar: In 1752, Britain and its colonies, including the Isle of Man, adopted the Gregorian calendar. This change necessitated an adjustment to the dates to avoid confusion and align with the new calendar system.
3. April-to-April: To accommodate the shift from the Julian to the Gregorian calendar, the year was extended for the year 1752. It started on 25th March 1752 and lasted until 4th April 1753, making it a transition year of 354 days. From 1753 onwards, the year was set to begin on 5th April and end on 4th April of the following year.
4. Modern Consistency: The April-to-April system has remained in place since 1753 with few alterations. It provides a consistent and easily recognizable time-frame for tax purposes, including income tax, capital gains tax, and other financial activities.

Therefore, in the Isle of Man, as part of the broader UK tax system, has followed the April-to-April format since the mid-18th century, maintaining continuity and clarity in tax administration and financial planning.

You can find more information on any of these topics by visiting the HMRC website https://www.gov.uk/government/organisations/hm-revenue-customs

View more Tax Help & News by clicking here