Understanding the UK Tax Year

The UK tax year is a fundamental concept that affects millions of individuals, businesses, and organisations across the United Kingdom. Understanding its structure, key dates, and implications is essential for anyone involved in financial planning, business management, or tax compliance.

What Is the UK Tax Year?

The UK tax year runs from 6 April of one calendar year to 5 April of the following year. This period serves as the basis for calculating income tax, National Insurance contributions, and various other taxes. For example, the 2025-26 tax year begins on 6 April 2025 and ends on 5 April 2026.

This annual cycle differs from the calendar year (1 January to 31 December) used in many other countries, making it a distinctive feature of the UK taxation system.

Historical Origins

The peculiar 6 April start date has historical roots dating back centuries. Prior to 1752, the UK used the Julian calendar, and the tax year began on 25 March (Lady Day). When Britain adopted the Gregorian calendar in 1752, eleven days were removed from the calendar year to align with the new system.

To avoid losing tax revenue from these missing days, the government moved the tax year start date forward by eleven days, from 25 March to 5 April. In 1800, a further adjustment was made due to another calendar correction, moving the start date to 6 April, where it has remained ever since.

Key Dates Within the Tax Year

Several important dates punctuate the UK tax year, each carrying specific obligations for different types of taxpayers:

6 April – Tax Year Begins

The start of the new tax year marks the point from which income, gains, and other taxable events are measured for the coming twelve months. Personal allowances, tax bands, and various thresholds typically reset or update on this date.

5 July – Payment on Account Deadline

For self-employed individuals and others who make payments on account, the second payment for the previous tax year is due by this date. These advance payments help spread the tax burden throughout the year.

5 October – Registration Deadline

Individuals who need to complete a Self Assessment tax return for the first time must register with HMRC by 5 October following the end of the relevant tax year. For example, those needing to complete a return for the 2025-26 tax year must register by 5 October 2026.

31 October – Paper Tax Return Deadline

For those submitting paper Self Assessment tax returns, the deadline is 31 October following the end of the tax year. Most taxpayers now file online, but this option remains available for those who prefer it.

31 January – Online Filing and Payment Deadline

This is perhaps the most widely known tax deadline in the UK. By 31 January following the end of the tax year, taxpayers must submit their Self Assessment tax return online and pay any outstanding tax owed. Additionally, the first payment on account for the current tax year is due on this date for those making such payments.

Impact on Different Taxpayer Categories

Employed Individuals

For employees who have tax deducted through PAYE (Pay As You Earn), the tax year structure primarily affects their annual tax code updates and any year-end reconciliation. Employers provide P60 forms after the tax year ends, summarising total pay and tax deducted.

Self-Employed Individuals

Self-employed people must track their business income and expenses according to the tax year. They report these figures in their Self Assessment return and calculate their tax liability based on profits earned during the tax year, regardless of when they actually receive payment.

Limited Companies

While companies have their own accounting periods (which may or may not align with the tax year), they must still file Corporation Tax returns based on their chosen accounting period. However, certain aspects of company taxation, such as rates and allowances, may change at the start of the tax year.

Planning Considerations

Understanding the tax year structure enables more effective financial planning. Some considerations include:

Timing of Income: For those with flexibility over when they receive income, spreading it across tax years can sometimes result in more favourable tax treatment, particularly if it allows use of personal allowances or lower tax bands in multiple years.

Utilising Allowances: Many tax allowances and reliefs are annual and do not carry forward. For example, the Capital Gains Tax annual exempt amount resets each tax year, so realising gains strategically can maximise the use of this allowance.

Pension Contributions: Pension contribution limits apply per tax year. Making contributions before the tax year end can provide tax relief and help maximise annual allowances.

Record Keeping: Maintaining organised records aligned with the tax year structure simplifies the preparation of tax returns and ensures compliance with retention requirements.

Changes and Updates

The UK government typically announces changes to tax rates, allowances, and thresholds in the annual Budget, with these changes often taking effect at the start of the following tax year. Staying informed about these updates is important for accurate tax planning and compliance.

Recent years have seen various changes including adjustments to income tax thresholds, National Insurance rates, and the introduction of Making Tax Digital requirements, all implemented around the tax year cycle.

Conclusion

The UK tax year, with its unique 6 April start date and structured cycle of deadlines, forms the backbone of the British taxation system. While its historical origins may seem curious, understanding this framework is essential for anyone managing their tax affairs in the United Kingdom.

Whether you are an employee, self-employed, running a business, or managing investments, the tax year structure affects how you plan, record, and report your financial activities. Staying aware of key dates and understanding how the tax year impacts your particular circumstances helps ensure compliance and may identify opportunities for more effective tax planning.