81% of UK in the dark about how much tax they are really paying, says ACCA
ACCA launches guide to help UK consumers lighten the tax load.
- (1888PressRelease) March 10, 2011 - 4 in 5 UK adults are unsure of the impact of indirect taxes such as VAT and council tax on their wage packet, according to a survey commissioned by ACCA (The Association of Chartered Certified Accountants). Less than a fifth (19%) of respondents in the nationwide poll of 2,085 people were aware that an additional 22% of the average salary is spent on other taxes after income tax has been deducted.
The poll, conducted by YouGov, also revealed widespread confusion about how much income tax employees should be paying. 84% of respondents were unable to correctly identify what income tax levels were paid on all three salaries of £20,000, £50,000 and £200,000.
Chas Roy-Chowdhury, head of taxation at ACCA, said: "We all know that paying some form of tax is a certainty of life, but it is alarming that as a nation we know so little about something that most of us regard as so important. Most of us just assume that we don't need to understand it - we just have to pay it. But as the recent administrative issues with HM Revenue & Customs (HMRC) reveal, we can't just assume we are paying the right rate of tax and it is up to us to make sure that we are."
Other highlights of the survey results include:
• There is confusion about the everyday items VAT applies to - 69% did not know that Jaffa Cakes are VAT exempt and 54% were unaware that gift vouchers are VAT free
• 86% didn't know that up to £325,000 could be gifted tax free to their dependents
• Less than half (47%) of UK adults who have worked have checked their tax code with HMRC, despite the recent issues with coding which revealed that thousands were paying too much and too little tax
• Only 14% could correctly identify the age of state retirement for both men and women would be 66 in 2020
Roy-Chowdhury continued: "Although we can't necessarily control the amount of income tax we pay, I think many people would be surprised at the amount they can save just by understanding the tax system better and applying that knowledge to their everyday lives. Our guide is designed to help them do just that and hopefully to reduce their tax burden. For example, while there is a lot of government hype around the benefits of electric cars, from a tax perspective the train is actually a much more economical way to travel."
The ACCA guide on managing your tax bill entitled, "Axe your tax bill" gives advice on how everyone from first time employees to pensioners can make tax reductions on items they frequently use and purchase, as well as make small lifestyle changes to bring down their tax outlay. It is available to download at ACCA's website (http://www.accaglobal.com/pubs/general/activities/library/tax/tax_pubs/pamr-oth-nic.pdf ) for a limited period.
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