What is the tax year?
Why is the UK tax year so different from other countries?
Why do we need to know about the tax year?
Since each tax year is a fixed date, it is very important for clients living in the UK.
Our customers often ask when they first arrived in the UK, so today we wrote an article to solve your confusion.
What is the tax year?
The tax year usually involves the calculation of personal allowances and pension tax credits.
In the UK, the tax year is 12 months from April 6th to April 5th (next year).
The tax year is also known as the fiscal year.
People who work in the UK know that the corresponding amount of income tax and pension will be deducted from the salary we receive every month.
Once the tax year enters the next new cycle, these accumulated amounts will be re-accumulated.
Why does the UK tax year start in April?
If you have lived in a European country before, you may know that Germany and other countries usually start the tax year on New Year’s Day to keep things convenient.
In fact, most of the countries we know of do this, but the UK doesn’t.
If you browse through various articles on the web you will find a plethora of references to the tax year, often involving far-flung historical changes.
In the Middle Ages, England and Ireland set the New Year on March 25, which was also “Lady Day”.
This day is historically seen as one of the four most important, and all accounts (debts and rent) need to be settled by this day.
Since then, this day has gradually been regarded as the beginning of the financial year. However, the passage of time and the switch from the Julian to the Gregorian calendar, among other factors, set the tax year on April 6th, which continues today.
Why the tax year is so important？
If you live and work in the UK, run your own business, etc., the tax year will be a time point that you need to pay attention to.
Firstly, most tax credits are accrued by tax year and generally cannot be carried forward. So you need to think about your time and use it wisely.
Secondly, if you are self-employed, you will need to file a self-assessment tax return, which is important to operating legally.
Finally, knowing and paying attention to the tax year can help you plan effectively and keep your budget in check.
In the next article, we will introduce some things you need to pay special attention to by the tax year.