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Read Full ArticleWith a tax year beginning on 6 April, the UK tax year has long been an international anomaly. A recent study has shown there is widespread support across UK businesses to change the tax year to be more in line with the rest of the world.
David Redfern, tax preparation specialist and director of DSR Tax Refunds writes the UK tax year runs from 6 April to the following 5 April and has done so since 1752 but this is in stark contrast to the situation in the rest of the world with most countries, including the US, Canada, Germany and France, having a tax year which runs from 1 January to 31 December.
A recent study by accounting firm BDO has demonstrated that most UK businesses back a change to the UK's tax year to bring it in line with the tax accounting situation in most other countries. The UK's tax year is anomalous when looking internationally, with most countries favouring a tax year that runs in line with the calendar year.
Even Australia, which runs its tax year from July to June, at least doesn't split months - the UK is the odd-one out, not only because of its April start but also that it splits the month of April between two tax years, which just adds to the complexity of tax accounting.
This latest survey shows that many businesses would welcome a change to the tax year to bring it in line with the international majority.
The tax year survey, which gathered the opinions of 500 UK companies showed that 91% of small businesses in the UK would favour a change to the tax year.
Not only would a change make things simpler for small businesses but those with international subsidiaries would find it particularly beneficial in aligning their accounting across the board.
Of course, the last thing that business needs right now is additional administrative burden but certainly consulting on a change would be a welcome first step.
Complex
Changing the tax year would be a complex process, with particular impacts on areas such as pensions and payroll, with most accounting processes working around a 6 April start date.
The Office for Tax Simplification is currently exploring whether there is any potential to change the UK tax year and those more complex areas, especially surrounding pensions, will need thorough consideration before any definitive decision is made but it is to be hoped that the voice of small business is heard - in order for UK businesses to prosper and thrive.
Office for Tax Simplification
The Office for Tax Simplification is an independent adviser to the UK government and looks at ways to simplify the tax system for businesses and individual taxpayers.
Picture: Would you like a change to when you have to do your tax returns?
Contractors, especially those working within the construction industry, who have yet to act on their tax return for the tax year ending on 5 April 2021 are encouraged to contact DSR Tax Returns Ltd.
DSR Tax Refunds Ltd is a firm of tax preparation experts who specialise in tax returns for construction workers working within the Construction Industry Scheme (CIS) as well as employees who are eligible to claim a tax refund for their work-related expenses, including employees working from home as a result of the pandemic.
www.tax-refunds.co.uk
Article written by Cathryn Ellis
27th August 2021