As a new or experienced investor, knowing the answer to the question of when does the tax year end is important. You can find everything you need to know here in this Moneyfarm blog.
If you are in employment, your employer probably pays you under the PAYE system, and if you have few savings or investments, the question of when does the tax year end is not important as any income tax you owe is collected automatically. But if you receive income other than through your main employment, you may need to declare it.
When Does the Tax Year End: Summary Table
|❓ When does the 2022-23 tax year end?||5th April 2023|
|🤓 How much taxes do you declare?||It depends on your income tax code|
|🏦 Other tax declarations?||Yes, you absolutely can!|
|⌚ 4 tax changes||• National Insurance changes|
• Taxation on dividends increase
• Inheritance Tax reporting changes
• Capital Gains extension changes
What the end of the UK tax year means for you
Most people in the UK are employed and pay taxes through the PAYE system. As a UK citizen, you must pay income tax on your earnings unless they are below the personal tax allowance threshold, which in the current 2021/22 tax year is £12,570.
The total amount of income tax you pay in a UK tax year is dictated by your tax code. Your employer automatically deducts the tax you owe, but before doing so, removes your National Insurance contribution, thereby ensuring your NI contributions are not taxed.
Under these circumstances, the question of when does the tax year end is of little or no significance.
If, however, you are an investor or are self-employed as a sole trader, the situation changes.
When does the tax year begin and end?
The 2021/22 tax year started on 6 April 2021 and runs through for 12 months, ending on 5 April 2022. All tax years follow the same timing, albeit the start and end years change accordingly.
How the tax year starting and ending dates came about
We now use the Gregorian calendar. Before Pope Gregory Xlll changed it in 1582, the world used to use the Julian calendar. It was also named after Julius Caesar. But it wasn’t until 1752 that we Brits changed across. By then, we were 10 days adrift with the calendar in the rest of Europe.
But the year 1800 wasn’t a leap year in the Gregorian calendar. Because of this, the Treasury decided to change the tax year-end and start dates, so the opening and closing UK tax year dates 2022 are 6 April 2021 and 5 April 2022, respectively.
If you are self-employed
If you’re self-employed, you’ll need to complete a tax return and a tax relief Self-Assessment SA101 form covering the financial year. Most self-employed people who have a sole trader company use the tax year as their financial year.
You need to know when does the self-employed tax year end as a self-employed individual. It is the 5 April – the same date for everyone. However, you must file a paper return by midnight on 31 October. If you file online, the deadline is extended to midnight on 31 January.
If you would like to spread the cost of your upcoming year’s tax obligation, you can apply to make payments on account. You can find out more on Gov.UK.
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If you receive income from other sources
You may have to make a tax declaration if you sell shares that are not in Stocks and Shares ISAs or PEPs, or sell units from a unit trust and dispose of certain bonds.
If you receive income from other sources outside your employment, paying tax is only necessary if the total amount is outside your Personal Savings Allowance (PSA). The PSA is £1,000 per annum for basic rate taxpayers and £500 for higher rate taxpayers. For more information, check out the Gov.UK website.
ISAs are what are known as tax wrappers. As long as you remain within your personal ISA yearly allowance of £20,000, your contributions are tax-free, as are any withdrawals. You do not have to include ISA funds in any tax declaration.
Moneyfarm Insights webpage will help you can find out more about taxes on Stocks and Shares ISA.
Are pensions taxable?
Is pension income taxable? Pensions can be taxable depending on your total pensionable income. The same income tax bands apply to any form of earnings. But although you may have to pay income tax on your pension, the good news is that you won’t have to pay National Insurance.
In terms of contributions, if you are classed as a high earner, it is important to plan your contributions and the resultant tax obligations carefully to reduce the tax burden. Find out more by reading this pension tax for high earners article.
Impending changes to the tax system
Now that you know when the tax year ends, you should be aware of some tax changes. They include:
- Changes to the National Insurance
- Increase to taxation on dividends
- Changes to tax thresholds in Scotland
- Window extended for reporting Capital Gains
- Changes in Inheritance Tax reporting.
You can find out more, if you need to, on Which.
What date does the tax year start in the UK?
The UK tax years run from April to April. It starts on 6 April in one year and ends on 5 April in the following year.
What is the 2022 2023 tax year?
The 2022-23 tax year begins on 6th April 2022 and ends on 5th April 2023.
What happens if I don’t file taxes?
There is a penalty fee if you don’t file taxes before the deadline submission. The penalty fee starts from £100 and can run into thousands of pounds. How much you pay depends on if you are one day, 3 months, 6 months or 12 months late.