Many UK taxpayers are wondering if the change in calendar year implies anything for their tax and financial duties now that the year has changed and we’re solidly in 2022. While the change of year brings with it some administrative changes. There is currently no reason to be concerned about new tax return deadlines. Here, we’ll go through when the end of UK tax returns is due this year and what you should keep in mind.
What is a Financial Year?
A financial year, also known as a fiscal year or a budget year, is a time period defined in government accounting. It’s frequently employed in the preparation of a country’s budget. In most cases, a country’s financial year does not correspond to the traditional calendar year. As a result, countries that use this system will often have taxation rules that require accounting records to be kept and maintained. As well as taxes to be assessed, in accordance with the government’s financial year.
In indirect taxes, calculating the tax on a yearly basis is highly important, especially when collecting income tax from a population. Annual government fees, such as licence fees and council tax. Will be charged in many places based on the fiscal year. This is also why a fiscal year is sometimes a tax year.
When is the Start and End of tax Year dates in the UK?
The end of the UK tax year dates begin on April 6th of one year and end on April 5th of the next year. For example, if the tax year begins on April 6, 2021, it will not end until April 5, 2022.
The numerals of the calendar year it covers are frequently used to identify specific fiscal years. So, if you wanted to see the data for the above-mentioned year. You’d have to look for fiscal or tax year 2021/22. The following year would be 2022–23, and so forth.
Why Does the UK Financial Year Start From April?
The reason the UK fiscal year begins in April has been debated for decades. It concerns not only our own country. But also a number of other European countries and powers.
The existing Julian Calendar, named after Julius Caesar, was ordered to be modified by Pope Gregory XIII in 1582. This is because, while the Julian Calendar was quite accurate when it was first set in place in 45 BC. The 11-and-a-half-minute gap between it and the solar calendar had built up over the 500 years since then, resulting in a 10-day difference.
The Pope responded by introducing the Gregorian calendar, which decreased the calendar year’s length from 365.25 days to 365.2425 days. This translates to a savings of about 10 minutes and 48 seconds per year. Also helped ensure that the new calendar system was even more precise than the old one. Italy, Spain, Portugal, and what was then known as the Polish-Lithuanian Commonwealth were all given the Gregorian Calendar.
The Gregorian Calendar was not adopted in the British Empire until 1752. By this time the UK had drifted 11 days behind the rest of Europe due to inflation. It was then that it modified the calendar.
However, the government still had to deal with a problem: under the old calendar. The financial tax year began on March 25th (the old New Year’s Day).
Why Do We Have a Fiscal Year in the UK?
For financial reporting, most countries either use the calendar year or agree on their own fiscal year. The dates will be up to the governments of these countries when they choose to set their fiscal year. Because of the transition from the Julian to the Gregorian calendars. Our fiscal year in the United Kingdom runs from April 6 to April 5 of the following year.
Unlike countries that base their financial tax year on the calendar (beginning on January 1st of each year). The fiscal year method has a number of advantages, including the fact that tax collection for both income and expenses occurs at the same time, making it easier for individuals to keep track of their finances.
Setting separate start and end dates for the financial tax year can also help a firm present a more accurate image of its financial performance. As it can better align their revenue and expenses.
Important dates if you are self-employed
When we talk about tax rates, we typically use things like “during the tax year” or “after the tax year’s finish. A tax year in the United Kingdom runs from April 6 to April 5 of the following year.
So, if we’re talking about the fiscal year 2021–2022, it’ll begin on April 6, 2021, and end on April 5, 2022. The 31st of January during the tax year would be January 31, 2022, the 5th of October after the tax year ended would be October 5, 2022, and the 31st of January after the tax year ended would be January 31, 2023.
How Does the UK Financial Year Affect Businesses?
The fiscal year is used by corporations to disclose their financial results. This entails preparing yearly financial statements in order to measure the profitability of your firm over the course of the year. As well as for tax considerations, capital calculations, and other uses.
The fiscal year in the United Kingdom applies to businesses that operate as follows:
- Sole traders
- Partnerships
Individuals working for businesses are also affected in this way. Most workers hired by businesses pay their income tax through PAYE (Pay as You Earn).
Because limited corporations have a separate financial year than sole traders and partnerships, they are not included in this list. This financial year begins on the company’s “birthday” (the day it began trading, as defined once it was registered with Companies House) and ends the day before that date the following year.
A limited company’s financial year is normally the same as its accounting term for corporation tax purposes. This is the term during which the corporation must report, and it can be a number of times over a five-year period.
What does the end of the tax year mean for me?
The end of the tax year and the start of a new one essentially reset how much tax is taken out of your pay, if you are an employee.
If you receive PAYE income, that is, if your payment is issued by a boss or a firm, and any tax or National Insurance contributions are deducted automatically, this simply means you’ll pay less tax for a few months.
This is due to the fact that everyone is to a certain amount of tax-free income each year.
This limit is £12,500 for the tax years 2020/21 and 2021/22.
The conclusion of the tax year implies something different if you are self-employed or a freelancer.
If you are self-employed, freelancing, or have made over £2,500 in untaxed income (including tips). Or have over £2,500 by renting out properties, you will almost certainly be to file a tax return.
When a tax return is due, you should receive a notification informing you that you must submit one; nonetheless, it is your obligation to determine whether you need to file one. On the HMRC website, you can do so.
You will have to declare what you’ve earned.
The deadline for filing the return for the tax year 2020/21 will likely be January 2022.
When it the end UK tax year return dates?
The tax year in the United Kingdom goes from April to April, unlike in several other nations where the tax year coincides with the calendar year. This indicates that we are currently in the middle of a tax year. Which began on April 6th, 2021, and will end on April 5th, 2022.
You’ll be able to start paying your taxes for the 2021/22 tax year after that date.
What if you haven’t yet paid your 2020/21 taxes?
While the majority of UK taxpayers have already submitted their tax returns and paid any outstanding amounts for the most recent tax year, 2020/21, others have yet to do so.
The deadline for filing paper end-of-tax year dates in the UK for the fiscal year 2020–21 has passed, since it was October 31, 2021. Online filers, on the other hand, have until January 31, 2022, to submit their 2020/21 tax returns.
FAQs
What tax year is this?
No matter whether your tax year is the same as your calendar year, you will always file taxes for the prior year. Taxes for the 2021 tax year will be filed in the 2022 tax year, regardless of how you define your tax years.
Is tax season extended for 2021?
The filing deadline to submit 2021 tax returns or an extension to file and pay the tax owed is Monday, April 18, 2022, for most taxpayers. … Taxpayers requesting an extension will have until Monday, October 17, 2022, to file.
Why do I have estimated tax payments for 2021?
Generally, taxpayers need to make estimated tax payments if they expect to owe $1,000 or more when they file their 2021 tax return, after adjusting for any withholding. … Corporations generally must make these payments if they expect to owe $500 or more on their 2021 tax return.
How do I make estimated tax payments for 2021?
You may send estimated tax payments with Form 1040-ES by mail, or you can pay online, by phone or from your mobile device using the IRS2Go app. Visit IRS.gov/payments to view all the options. For additional information, refer to Publication 505, Tax Withholding and Estimated Tax.
