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OTS Publish report exploring a change to the UK tax year end date

Posted: October 12, 2021

The Office of Tax Simplification (OTS) have published an analysis of the potential benefits, costs and implications of a change to the 5 April tax year end date (TYED).

In June, the OTS published a scoping document which outlined that it would be completing a review on the potential for moving the TYED. The OTS confirmed that it would be assessing two alternative dates, 31 March and 31 December. The review was not a call for evidence, however the CIPP policy team had the opportunity to meet with the project team to discuss the potential implications for payroll professionals.

The final report published on 15 September 2021 does not recommend a move in tax year end date, instead it focuses on the benefits, costs and implications of any potential change. The OTS suggest the simplest design would be to align to the calendar year, with an end date of 31 December, creating tangible benefits for international data exchange. However, they recognise the scale of a move to 31 March would be substantially lower.

The report identifies that there would be significant change required for any transition in TYED. The report describes the impact on the HMRC, DWP and state pension systems, alongside PAYE systems. The OTS suggest that any transition would reduce capacity for other changes to be made at the same time and suggest any timeline to move the TYED should come after the creation of the single customer account.

The OTS do make one recommendation in the report. Their research suggested that many self-employed taxpayers and landlords were informally using 31 March as a cut off date. The OTS recommended that the government formalise arrangements to allow taxpayers to use 31 March cut off, instead of 5 April in relation to the calculation of profits from self-employed and property income.

It is now with the Government to review the findings of the OTS and take any next steps on this topic. The CIPP will continue to keep you up to date with any future changes.

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