tax year

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The year of assessment for income tax and capital gains tax purposes, running from 6 April to 5 April in the following year. This is by contrast with the financial year, which runs from 1 April to 31 March. Prior to 1752, the tax year began on Lady Day, which is 25 March, being one of the four days in the year on which rent was traditionally paid. In 1752, Great Britain moved to the Gregorian calendar and eleven days were “lost” in the move. In order to avoid advancing the date of payment of tax, the tax year was extended to 5 April and has remained at that date ever since. Income tax (and capital gains tax) is imposed for a single year. If the Finance Act is not passed by Parliament, there is no taxation for that year. Each Finance Act, thus, imposes a charge to tax for a specified tax year.

Subjects: Law.

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