According to a survey by HSBC, ignorance is pervasive regarding even the simplest of information about personal taxes. The survey had 2,100 adult participants. It revealed the majority are failing to check their income tax deductions. Even though a considerable amount of taxpayers, around 5 million, receive a refund or a bill from HMRC each year, over 50 per cent of Britons do not known their own tax code and 36 per cent have never looked at their P60.
The survey also revealed that current thresholds for different tax brackets were widely misunderstood.
Confusion about what income tax is paid on is also widespread. Almost 55 per cent did not know that tax is payable on employee benefits and one third were unaware it is payable on pension income.
Surprisingly, an additional 20 per cent did not know that taxes are paid on most savings plans.
The head of pensions, savings and investments at HSBC, David Wells, discussed possibilities of what could be happening with taxes from an employee point of view, saying: “Whether you are in full or part time employment, there is always a chance you have been overpaying in which case you can reclaim the tax. There is equally the possibility that if you have been given the wrong tax code you could be underpaying and could be faced with a large tax bill at the end of the financial year.”
Liam McKenna, of accountants Martin Aitken, said agents of taxpayers need copies of coding notices or tax calculations sent by HMRC.
He discussed how important this was, saying: “The consequences of this measure are entirely predictable. Without the involvement of agents, more HMRC errors will go undetected for longer and the extent of underpayments and overpayments will escalate.”