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Fiscal year

The fiscal year is the twelve month period used to report and forecast in accounting. Its specific month-to-month span varies depending on where you live. In the UK, it’s also known as the “tax year” and it runs from 6th April one year to 5th April the following year.

Each tax year is described as 2019/20 tax year, for example, rather than the “tax year 2020” or “fiscal year 2021”.

How does the fiscal year work for tax?

As you probably know, you pay your taxes on any undeclared income. This basically means any income that you don’t get via a PAYE salary i.e. income that HMRC aren’t aware of. You pay this via a tax return by 31st January – the online tax return deadline. 

You pay tax based on your earnings each fiscal year, so between 6th April – 5th April. But to be confusing, your tax bill isn’t due until the following year. Here’s an example of the tax bill timeline:

  • You earn £32,000 from self-employed income between 6th April 2019 – 5th April 2020
  • This is the 2019/20 tax year
  • Your expenses for this period total £6,000
  • Your taxable income is £26,000 (£32,000 – £6,000)
  • You pay your 2019/20 tax bill by 31st January 2021

If you want to calculate the tax you owe, check out our TaxScouts calculators.

Is it the same as the financial year?

Unfortunately not. 

Just to be confusing, the financial year in the UK is 1st April to 31st March. The UK government uses it for the Budget. For any new regulations brought in during the spring or Autumn Budget, the government will usually introduce them from 1st April in any given year. 

To read more about how the tax year came about and why it’s so different from our calendar year, check out our blog: What is the tax year?.

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