Tax

What is Fiscal Year / Tax Year?

The UK tax year runs from 6 April to 5 April the following year. All personal taxes (Income Tax, CGT) are calculated on this basis.

Example

Self Assessment for 2025/26 covers income from 6 April 2025 to 5 April 2026, filed by 31 January 2027.

Key Dates

6 April = new tax year

How Fiscal Year / Tax Year Works in Practice

The UK tax year (also called the fiscal year for personal taxation) runs from 6 April in one year to 5 April the following year. This unusual start date has historical origins dating back to 1752 when Britain adopted the Gregorian calendar. All personal taxes -- Income Tax, Capital Gains Tax, and National Insurance contributions -- are calculated based on this period. The current tax year is 2025/26, covering 6 April 2025 to 5 April 2026.

It is important to distinguish the tax year from your company's accounting period. Your limited company can choose any year end date it likes -- 31 March, 31 December, 30 June, or any other date. Corporation Tax is calculated on the company's accounting period, not the tax year. However, as a director, your personal Income Tax on salary and dividends is calculated by tax year. This means dividends declared in March 2026 fall in 2025/26, but dividends declared in April 2026 fall in 2026/27.

Self Assessment tax returns are due by 31 January following the end of the tax year. So for 2025/26 (ending 5 April 2026), the online Self Assessment deadline is 31 January 2027. Payment of any tax owed is also due by this date. If you have payments on account, these are due on 31 January and 31 July.

The tax year timing matters for planning purposes. If you are close to a tax band threshold, you can control which tax year dividends fall into by timing when they are declared. For example, if you have already used your basic rate band for 2025/26, you might defer additional dividends to April 2026 so they fall into 2026/27 instead.

Step by Step

HMRC operates on tax years. Every income source you have is allocated to the tax year in which it arises. Salary is taxed in the tax year it is paid (not earned). Dividends are taxed in the tax year the dividend is declared and becomes payable. Rental income is taxed in the tax year it is due.

Your employer applies PAYE throughout the tax year, deducting Income Tax and National Insurance from each pay packet based on your tax code. At the end of the tax year (5 April), your employer provides a P60 summarising total pay and deductions. If you have income beyond your employment -- dividends, rental income, self-employment -- you declare this through Self Assessment.

The tax year also governs annual allowances. Your Personal Allowance (£12,570), dividend allowance (£500), capital gains annual exempt amount (£3,000), and ISA allowances (£20,000) all reset on 6 April. Unused allowances cannot be carried forward to the next year (with very limited exceptions like unused Marriage Allowance).

Practical Tips

Diary the key dates: 6 April (new tax year), 31 July (second payment on account), 5 October (register for Self Assessment if new), 31 January (filing and payment deadline)
Use the end of the tax year (before 5 April) to maximise ISA contributions, pension contributions, and capital gains tax planning
Time dividend declarations carefully around the 5/6 April boundary to manage which tax year they fall into
If you have capital gains to realise, spread them across two tax years to use two annual exempt amounts

Common Mistakes to Avoid

Confusing the company's accounting period with the personal tax year -- they are usually different dates
Missing the 31 January Self Assessment deadline and incurring automatic £100 penalties
Not using annual tax-free allowances before 5 April, particularly the CGT annual exempt amount and ISA allowance
Declaring dividends without considering which tax year they fall into and the impact on your overall tax position

Frequently Asked Questions

Why does the UK tax year start on 6 April?

It dates back to 1752 when Britain switched from the Julian to Gregorian calendar, losing 11 days. The Treasury refused to lose 11 days of tax revenue and moved the year end from 25 March to 5 April. It has remained there ever since.

Is the company financial year the same as the tax year?

No. Your company can choose any accounting period end date. Common choices are 31 March, 31 December, or the anniversary of incorporation. Corporation Tax follows the company accounting period. Your personal Income Tax follows the 6 April to 5 April tax year.

When do I need to file my Self Assessment?

For the 2025/26 tax year, the paper return deadline is 31 October 2026 and the online deadline is 31 January 2027. Any tax owed must also be paid by 31 January 2027. Payments on account for 2026/27 are due on 31 January and 31 July 2027.

Do dividend tax years depend on when I declare or when I receive the money?

Dividends are taxed in the tax year they become payable, which is typically the date stated in the board minutes or dividend voucher. The actual date you transfer the money to your personal account does not matter for tax purposes.

Can I carry forward unused Personal Allowance to the next tax year?

No. The Personal Allowance is a use-it-or-lose-it annual allowance. If you earn less than £12,570 in a tax year, the unused portion is lost. The only partial exception is the Marriage Allowance, which lets you transfer up to £1,260 to a spouse.

Source: HMRC Self Assessment tax returns: https://www.gov.uk/self-assessment-tax-returns

Related Terms

Accounting Period

Your accounting period is the 12-month timeframe your company uses for financial reporting and tax calculations.

Self Assessment

Self Assessment is the system HMRC uses to collect Income Tax from people who don't have all their tax deducted at source (via PAYE).

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