The Tax Year

One might well ask why the  UK  tax year (the fiscal year for individuals) runs annually from the 6th April to the 5th April of the following year. Historically, the UK tax year began on 25 March  which is called Lady Day, one of the key “quarter days” for settling rents and taxes, and ended on 24 March the following year. 

The UK was following the Julian calendar, which miscalculated the solar year by a small amount which added up to 11 days in 1752, whereupon Britain adopted the Gregorian calendar and the tax year end was shifted from 24 March to 4 April to make sure the taxman’s sums still added up. In 1796,there was a leap year, which added an extra day to the calendar and the tax years was pushed forward by one more day. So, from 1796 onward, the UK tax year officially ended on 5 April and has stayed there ever since.

No one likes being taxed. It is an unpopular but nevertheless highly necessary way for governments to raise revenue. However, currently in the UK, it is slightly starting to feel that you will be taxed if you so much as sneeze.  In fact, you might even be taxed if you don’t! 

Taxes are far from new.  Records for the First Dynasty in Egypt c.3,000BC record taxes that were collected in the form of payment in goods and labour, for example through commodities such as grain or livestock, oil or ceramics. Grain was of course particularly important and was then stored in government granaries for redistribution or as an emergency food supply. 

The same policies were likely in place in England in Iron Age times - obligations in terms of tribute or dues would have been collected by various chieftains. Written records in the UK really only began with the Anglo Saxons but we know that in 1012, Ethelred the Unready raised “Danegeld”, effectively a tax, to try to pay the army to defend England from the Northmen (Normans) otherwise known as the Vikings. It was a land-based tax whose unit was a hide: an area of land sufficient to support one family. The true size and economic value, however, varied enormously.

This tax continued to be collected by the Vikings even after they had won and they – the Normans - were the successful conquerors. Later, it was replaced by taxes on personal property and income. From 1188, taxes were levied at 10% of all goods and revenues to raise funds for a crusade. Then, in 1203, King John introduced an export tax on wool, whilst in 1275 King Edward I introduced taxes on wine. Poll taxes were tried out in the late 14th century and were so unpopular they contributed to the Peasants' Revolt in 1381. (Mrs Thatcher’s Poll tax had a similar result 600 years later and it led to her resignation. Politicians never learn!)

Since then, in England, there have since been hearth taxes, window taxes and, in 1783, a brick tax which was introduced by King George III to fund the  wars in the American colonies. All that happened was that bricks became larger, but it lasted until 1850. More land taxes were tried out and then in 1799, the then Prime Minister, William Pitt the Younger, introduced income tax for the first time to fund the Napoleonic Wars. It was supposedly a temporary measure but unsurprisingly, deeply unpopular. Abolished in 1816 after the war ended, it was perhaps inevitably reintroduced in 1842 by Sir Robert Peel to help finance free trade reforms and has been part of the tax landscape ever since. 

The First World War was financed by both by borrowing large sums at home and abroad, by new taxes and by inflation. Any unnecessary expenditure during this time was postponed and the government wisely avoided indirect taxation believing that such methods tended to raise the cost of living and cause discontent. 

VAT became a standard form of taxation when the UK joined the EEC in 1973. Starting at 10%, it is now 20% in the UK and accounts for just over 15 percent of total tax revenue. VAT as a concept quickly spread around the world: through parts of Latin America, then from the 1980s onwards, throughout Asia and Africa. By 2022, over 170 countries had some form of it.  We seem all to be under the same sky.

In addition, there are business rates, capital taxes, corporation taxes, inheritance taxes, Schedule A taxes, Schedule D taxes, National Insurance Contributions, excise duties, Stamp Duty, vehicle tax, air passenger tax, gambling levies and so the list goes on. The net result is that, before you have had even had a cup of coffee in the morning, you are probably paying a tax. 

The latest budget in the UK raised taxes in income, property, savings, dividends and capital from which there is general gloom and little or no prospect of growth. 

"For a nation, to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle" (Winston Churchill). There is a growing feeling that, even if “the best things in life are free”, sooner or later this government will find a way to tax them.