OTS – Report on Change in Tax Year
The Office of Tax Simplification (OTS) has published a review setting out its analysis of the benefits, costs, and wider implications of a change to the date of the end of the tax year for individuals.
Although the review did not aim to make a specific recommendation about whether such a change should be made, it finds that there are clear benefits in adopting a tax year which is either aligned with the calendar year (31 December) or with a calendar month-end (31 March), especially given the increasing automation, internet-enabled commerce and digitisation of financial information and accounting systems generally.
OTS considers it would in any case not be feasible to change the tax year-end date before the scheduled 5 April 2023 start date of Making Tax Digital (MTD) for Income Tax. However, OTS recommends that in the short-term the government and HMRC pursue ways to formalise arrangements to allow (or even require) taxpayers to use a 31 March cut off to stand in for 5 April in respect of the calculation of profits from self-employment and from property income, ahead of the implementation of MTD for Income Tax.
For questions or more details please get in touch with our Tax Team via email at TaxTeam@elmanwall.co.uk