Why does the tax year run from 6 April to 5 April?
An oddity of the UK tax system is that the personal tax year runs from 6 April to 5 April of the following year.
And that's why we refer to tax years across two calendar years. So the tax year 2020/21 is from 6 April 2020 to 5 April 2021.
Let's start with Christmas. 25 December. In the medieval period, it was traditionally one of the four "quarter days" when rents would be due and accounts settled. The days were (and still are!):
- Lady Day (25 March)
- Midsummer (24 June)
- Michaelmas (29 September)
- Christmas (25 December)
At this time, New Year was celebrated on 25 March - Lady Day (which commemorates the visit of the Archangel Gabriel to Mary, letting her know that she'll be the mother of Christ). To us it's an odd time to have a new year but there are two good reasons. First, it's close to the spring equinox when the days and nights are roughly equal. And second, it's at the start of a farming season ... so if someone is moving to a new plot of land, it's a good time to start and to settle with the landowner.
Britain was also using the Julian calendar which had been devised about 40 BCE, and which a minor flaw in that it ran "a little slow". It meant that the equinox and other solar events were happening out of sync with the dates they were meant to be on.
In 1582, Catholic countries started to address this with the introduction of the Gregorian calendar (after Pope Gregory) which also put in place some other reforms such as around the timing of Easter. To make sure that it no longer runs slow, the new calendar doesn't have a leap year in century years that aren't divisible by 400. So make a note that we'll roll straight from 28 February 2100 to 1 March 2100.
It took until 1752 for Britain to adopt this Gregorian calendar. One of the changes that was included was to change the new year to 1 January.
By this point, the calendars were out of sync by 11 days. So to adjust, when the calendar came into effect, Wednesday 2 September was followed by Thursday 14 September.
However, to ensure the tax takings were still for a whole year, the compromise was that the tax year would continue up until the Julian tax year end 24 March, corresponding to 4 April in the new calendar.
A couple of leap year resyncs later, and we've got a tax year running from 6 April to 5 April the following year.