end of the tax year

Julius Caesar lived over two millennia ago, but still influences our everyday. No I am not talking about the overpriced (but delicious) salads 🥗 , I am talking about the calendar 📆.

As we enter March, for portfolio managers it means one thing: Tax year end. Ensuring clients have used their now stingy CGT allowance, ensuring all ISAs have been subbed and checking brought forward losses have been registered all before April 5th. But why April 5th? Why not, 31st March? 31st December?

The reason goes back to 1582, when Pope Gregory XIII ordered a change in the calendar. Prior to this date, we had worked off the ‘Julian’ calendar since 45 BC but this differed from the solar calendar by 11 and a half minutes. 11 and a half minutes doesn’t sound a lot but over 500 years it ended up creating a deviation of 10 days to the solar calendar (the power of compounding!!). In order to address this, the Pope introduced the Gregorian calendar.

The Gregorian calendar reduced the length of the calendar year from 365.25 days to 365.2425, a reduction of 10 minutes and 48 seconds per year.

The new calendar was not officially adopted by the UK until 1752 and by that time, the UK had shifted by 11 days away from the rest of Europe.

On the old British calendar, the tax year began on 25th March, which was Lady Day (the Feast of the Annunciation), a traditional Christian holiday. The British Treasury did not want to lose any revenue and in 1752 decided that year would be the usual length (365 days) and therefore the financial year would end on 4th April.

For the next 48 years everything went smoothly until in 1800, which was not a leap year in the new Gregorian calendar but would have been in the Julian system. Therefore, the Treasury decided to move the start of the UK tax year back to April 6th.

So when you are next out for lunch and order your Caesar salad, you should know that the “Emperor” impacts our financial lives still to this day.