What Is the UK Tax Year and Its Key Deadlines?
Demystify the UK tax year. This guide explains its core principles, personal financial impact, and essential dates for effective tax management.
While many nations align their tax period with the standard calendar year, the United Kingdom operates on a distinct cycle. Understanding this unique timeframe is important for individuals to manage their financial obligations, as it governs how income is assessed and when various tax-related actions are required.
Defining the UK Tax Year
The UK tax year begins on April 6th and concludes on April 5th of the following calendar year. This distinct timeframe has historical origins, stemming from the adoption of the Gregorian calendar in 1752.
Prior to this, the tax year aligned with the Julian calendar, ending on March 25th, known as Lady Day. When Britain transitioned to the Gregorian calendar, the tax year end was shifted to April 5th to prevent a loss of tax revenue. An additional day was added in 1800, pushing the start to April 6th.
How the Tax Year Impacts You
The UK tax year directly influences how an individual’s income and financial allowances are calculated and applied. All income earned, whether from employment, self-employment, or investments, is attributed to the tax year in which it is received. Tax-free allowances, such as the Personal Allowance, and various tax thresholds are reset at the beginning of each new tax year on April 6th. This means that an individual’s entitlement to these allowances renews annually.
For employed individuals, the Pay As You Earn (PAYE) system operates within this cycle. Tax codes and deductions are applied by employers from April 6th through April 5th, determining the amount of income tax and National Insurance contributions withheld from wages. Self-employed individuals and those with other sources of income, such as rental income or significant investment gains, file a Self-Assessment tax return which covers all taxable income and capital gains earned during a specific tax year. The annual exempt amount for Capital Gains Tax also resets with the new tax year.
Important Dates and Deadlines
Several important dates and deadlines are linked to the UK tax year, particularly for those who complete a Self-Assessment tax return. For income earned during a tax year, the deadline for submitting a paper Self-Assessment tax return is October 31st following the end of that tax year. The deadline for filing an online Self-Assessment tax return is January 31st of the following year.
Payments for Self-Assessment tax are also due by January 31st for the previous tax year, with a second payment on account due on July 31st for the ongoing tax year. Employed individuals receive a P60 document from their employer by May 31st, detailing their earnings and deductions for the tax year that just ended on April 5th. If an individual leaves employment during the tax year, they will receive a P45 form, which summarizes their earnings and tax paid up to their leaving date.