The origins of the April to April tax year date back into the mists of time and many historical figures from Julius Caesar to St Bede the Venerable played a part in the story. Fast forward to the present day and Minister for Finance Mr McCreevy, who announced last July that the income tax year would be aligned with the calendar year from 2002.

The Minister said the change to the calendar year would put the collection of income tax on a more rational and simplified basis, while taxpayers and social welfare recipients would benefit earlier from Budget day changes. Until now, tax changes introduced in the December budget applied from April and social welfare changes from May. From 2002, Budget day tax changes and social welfare weekly rate improvements will be brought forward to January 1st.

To enable the 2002 tax year to run from January 1st to December 31st, there will be a "short" transitional tax year of nine months or 39 weeks from April 6th to December 31st of this year.

For the short tax year, tax bands and tax credits will be scaled back to 39 weeks. In general, all allowances, credit bands, exemption limits and other annual amounts will be adjusted from their full-year value to take account of the shorter tax period. The amounts will be reduced to 74 per cent (270 days/365 days) of the normal annual amounts.

PRSI ceilings will not be adjusted for the nine-month transitional tax year and social insurance benefit entitlements based on contributions in that year will be fully protected. For the next tax year, beginning on April 6th, an individual will pay tax only on their income for the 39-week period to December 31st. A summary of the bands of taxable income, adjusted for the short year, is in the Revenue leaflet.

There will also be a change in dates for filing tax returns and payment of tax for self-employed tax payers. In the nine-month transitional tax year, self-employed tax payers will be assessed on about three-quarters of income for the 12-month accounting period. The taxpayers' credits for that year will also be reduced to 74 per cent. They will then pay tax in 2002 on the income or profits from a full 12-month accounting year. Preliminary tax for 2000/ 2001 or 2001 is due by October 31st.

The tax return for the short tax year and the balance of tax for that "year" will both be due by October 31st, 2002. Preliminary tax for the tax year 2002 will also be due by October 31st, 2002, with the return and balance of tax for that year being due on October 31st, 2003.