March 28, 2017Why does the tax year start on April 6th?

Happy new year

With the new tax year just around the corner, have you ever wondered why our tax year runs from 6th April to 5th April each year? You might think it would be more logical for the year to run from 1st January to 31st December – as it does in Austria, Bulgaria, China, France, Greece, Italy, Portugal and a whole host of other countries.

The reason for our strange apparently illogical tax year dates back to medieval times.

March 25th: the start of the year

Angel Gabriel

From 1155 to 1752 in England and Ireland, our New Year started on March 25th. This was known as “Lady Day” – the traditional name given to the Feast of the Annunciation which commemorates the announcement by the Angel Gabriel to Mary that she would give birth to Jesus Christ. In fact, Lady Day was one of the most important days in the religious calendar, along with Midsummer (24th June), Michaelmas (29th September) and Christmas Day (25th December).

On this day, year-long contracts between landowners and tenant farmers would begin and end in England and nearby lands. Lady Day was a logical choice for the start of the legal year as it roughly coincides with Equinox (when the day and night are of equal length).  Accounts had to be settled by Lady Day and the other  ‘quarter days’ in the year, and with Lady Day being the first in the year, it gradually became known as the start of the financial year.

So how did we end up at April 6th?

Julius ceaser

Up until 1582 we used the Julian Calendar, so called because it was established by Julius Caesar. The Julian Calendar had 11 months, each consisting of either 30 or 31 days, plus February which consisted of 28 days or 29 days every leap year. Unfortunately the Julian Calendar did not align with the solar calendar – i.e. the time it takes for the Earth to move around the sun – and this led to problems.

The difference between the Julian calendar and the solar year was just 11 and a half minutes – but over the years, those extra minutes added up! By the late 1500s, there were 10 days difference between the Julian calendar and the solar calendar. This was a big worry for the Roman Catholic church in particular as it meant the celebration of Easter was gradually getting later and later in the year.

Pope Gregory

On October 1582 Pope Gregory XIII introduced the “Gregorian” calendar to tackle the problem. This omitted three leap days each 400 years by the authority of a papal bull (the  term used for a decree issued by a pope of the Roman Catholic Church) known as “Inter Gravissimas”. Although Europe adopted the Gregorian calendar, both England and Russia continued with the Julian Calendar (perhaps because of its history of conflict with the Roman Catholic church).

By 1752, with England 11 days out of synch with the rest of Europe, it was finally accepted that a change was necessary. That year, 11 days were dropped from September, so that September 2nd was followed by September 14th. However, naturally the Treasury were concerned about losing tax revenues and so they extended the 1752 tax year by adding  11 days to the end. As a result, April 5th became the beginning of the 1753 tax year.

April 6th

Of course, there were still differences between the Julian calendar and the Gregorian calendar – and a further adjustment of one day was needed in the year 1800, bringing us to April 6th. While under the Julian calendar the year 1800 would have been a leap year, it would not under the Gregorian calendar – so the Treasury treated 1800 as a leap year anyway for purposes of taxation in order to get an extra day’s revenue (are you surprised?).

April 6th was formalised as the start of the tax year in 1900.

All that remains to be said is, happy new year!

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