The British genius for
insanely obscure tax rules is nowhere more evident than in our
choice of tax year, which starts on the obviously convenient date
of 6 April. Personally I think 7 April would be much more
logical.
It's all the fault of
a ragbag gang of worthies including Julius Caesar, the First
Council of Nicaea, a monk called Little Dennis, a Pope called
Gregory and an English Earl; although like all the best stories it
also features circumcision, leather furniture and a
donkey.
In 46 BC Julius Caesar
reformed the Roman Republican Calendar. This was a completely
insane system with a basic year of only 355 days alternating with
years of either 377 or 378 days. This was achieved by the
extraordinary mechanism of inserting a leap month of 27 days after
the 23rd (or sometimes 24th) of February and then scrapping the
last 5 (or sometimes 4) days of February. Unfortunately it didn't
work because the power to insert a leap month was manipulated by
politicians as a way of lengthening, or more usually shortening,
the period of office of their allies and rivals. So by the time of
Caesar's reforms the calendar was completely out of line with the
seasons and he had to insert 3 whole leap months into 46 BC (one in
February and two between November and December), and create a year
that dragged on for 445 days.
The following year, 45
BC, marked the first of the Julian calendar. It began on 1 January
and all the months were as we now have them giving a standard year
of 365 days. Every 4 years a leap day was added, although bizarrely
it wasn't originally tacked onto the end of February but squeezed
in between February 23rd and 24th so as to give two consecutive
days both confusingly labelled 24th February.
In 325 AD the First
Council of Nicaea met to thrash out the doctrine of the Trinity.
They also found time to standardise the method for calculating
Easter. Because the crucifixion took place at the Jewish Passover
festival, which is linked to the moon, the church decided to define
Easter as the first Sunday, after the first full moon, after the
spring equinox. Depending on where you are on the earth the date of
the equinox varies slightly but it's taken to be 21
March.
All went well until
the 16th century when the Roman Catholic church, despite their
uneasy relationship with scientists in general, and astronomers in
particular, noticed that the actual date of the spring equinox was
gradually moving away from the 21 March. This was alarming because
it meant the church might be celebrating Easter on the wrong date.
In 1582 Pope Gregory XIII introduced the Gregorian calendar which
was designed to solve the problem. It made two changes to the
Julian calendar. First of all it moved the calendar forward 10 days
by skipping from the 5th to 14th October 1582 and it then changed
the pattern of leap years by introducing a new rule that years
divisible by 100 would only be leap years if they were also
divisible by 400. So 1600 and 2000 would be leap years but not
1700, 1800 or 1900.
Unfortunately Europe
was at the time embroiled in several centuries of Catholic v
Protestant bickering so the Pope's new calendar, which he'd
modestly named after himself, wasn't universally
welcomed.
In 1700, Britain,
still using the Julian calendar, had a leap year, while much of
Europe using the Gregorian calendar didn't. The Union of Scotland
and England took effect in 1707 and because both countries were
still on the Julian calendar, they did at least agree on the date
of Easter. Unfortunately they didn't agree on the date of New
Year's day.
The problem was that
when Dionysius Exiguus (Dennis the short) sat down, in the 6th
century, to 'mis-calculate' the year of Jesus' birth, and introduce
the AD system, he started the year on 25 March. The argument being
that since Jesus was born perfect he must have been carried for
exactly 9 months and been conceived on 25 March. No doubt any
mother who has ever been compelled to ride hundreds of miles on a
donkey while heavily pregnant would confirm it's a sure way of
inducing an early birth. But never mind. England had adopted this
'Annunciation' style dating - so called because 25th March was the
feast of the Annunciation, the day the angel announced to Mary that
she was pregnant. Meanwhile back in 1600 the Scots had the good
sense to adopt the rival 'Circumcision' style dating - 1 January
being the day the church marks the circumcision of Jesus. An event
they have been enthusiastically celebrating ever
since.
The result was endless
confusion because in England the day after 31 December 1749 was 1
January 1749, and the day after 24 March 1749 was 25 March 1750,
New Year's Day. For almost a quarter of each year England and
Scotland disagreed about what year it was.
To end this mess, and
bring the UK into line with the rest of Europe the Earl of
Chesterfield introduced the Calendar (New Style) Act of 1750. He
was appropriately rewarded by having a leather sofa named after
him.
The Act did two
things. It changed England's New Year from 25 March to 1 January
(1-0 to the Scots), and it introduced the Gregorian calendar. The
UK, using the Julian calendar, was now 11 days behind much of
Europe and on top of that the English didn't know what year it was.
So in England we had a short 1751. It started on 25 March and ended
on 31 December. Then throughout the UK 11 days were removed from
the following October and Wednesday 2 October 1752 was followed by
Thursday 14 October. Sorted!
Except for one small
problem. The tax year was left completely unchanged: it still began
on 25 March and stayed on the Julian calendar; only by now
everybody else had gone Gregorian and what the taxman thought was
25 March was called 5 April.
So why does the tax
year start on 6th April and not the 5th? Simple. In 1800 the
taxman's Julian calendar had a leap year and gained an extra day
but the Gregorian calendar used by everybody else didn't, so 5th
April moved on to 6th. In 1900 it should have advanced another day
to 7th April, but by then even the tax authorities had forgotten
what rules they were supposed to be following.
The curious result is
that we are stuck with a fiscal year that starts on a completely
ludicrous date. In fact it's dafter even than that. Corporation tax
and government finances use the much more sensible financial years
which start on 1 April. The fiscal year is only relevant for two
taxes: income tax and capital gains tax. Income tax didn't exist in
1752; it wasn't introduced until 1799. And capital gains tax wasn't
invented until 1965.
1. Do-it-Yourself
