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A dog teaching | AccountingWEB | A lesson in tax
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Teaching tax: A lesson to be learnt

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With a poll showing that half the public doesn't understand a basic principle of income tax, Amy Chin asks if the subject should be on the national curriculum.

9th May 2024
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I loved school. Hanging out with my friends in the common room, the daily pain au chocolat in the lunch hall, D of E and school trips but also learning, the classroom environment and soaking up knowledge.

That's probably what took me away from a glittering career in financial services audit and back to the classroom as a tutor after completing my ACA qualification. But as much as I enjoyed school, I have to admit to a confusion in the priority placed on certain subjects in the UK curriculum, to the detriment – in my opinion – of important life skills.

On leaving secondary school I am confident that, if called upon, I could competently construct an entire village from wattle and daub, explain in detail the formation of an oxbow lake, conjugate the verb 'to fight' in Latin and create questionable wall hangings in rudimentary Batik.

However, ask me to explain the basics of taxation, how mortgages work or draw up a simple budget and I'd have been stumped.

Lack of public knowledge

Tax Policy Associates ran a poll recently which showed that "half the public doesn't understand a basic principle of income tax". The report analysed the respondents based on various attributes including age, location, income, education and political leaning, but the results barely budged, with a 50-50 breakdown true across almost all subgroups.

Not understanding the basic concepts of taxation is not only a concern for those entering into property transactions, navigating inheritance tax or setting up as self-employed – arguably situations where expert advisers are likely to be involved.

It is far wider-reaching with individuals in employment, believing their tax affairs are being dealt with through PAYE, often finding themselves caught in unexpected taxation snares caused by the high-income child benefit charge or an unidentified error in their tax code.

Trawling through reams of FTT and UT decisions when covering cases for AccountingWEB throws up a common theme; a lack of understanding of the tax rules is rarely accepted as a reasonable excuse for failure to meet tax liabilities. But with so little focus on education, where an individual has neither the means nor (often) the sense to engage an accountant, how are they expected to understand the intricacies of their tax position?

Optional extra

In the UK currently, whether to include taxation in the curriculum is a decision for each individual school to make. Given the dearth of understanding of the topic in the general adult population, it is unsurprising that many teachers don't feel confident enough in their own knowledge to consider tackling it in the classroom.

I spoke to ATT Technical Officer Emma Rawson to find out more.

Do you think there is a need for the principles of taxation to be taught in schools?

"There is definitely a need for taxation to be taught in schools.

"Everybody pays tax at some point in their life – whether that’s through a job, self-employment, or even just VAT when buying a chocolate bar. However, despite its importance, it remains a mystery to many.

“As a result, too many young people leave school not understanding how tax works or how it will affect them. This can lead to some nasty shocks when they enter the world of work.

"Nobody should leave school without being able to understand what their first payslip means. A rising number of young people are now also entering self-employment, whether intentionally or through monetising existing hobbies and interests.

“Without a basic grasp of the tax system, they could easily end up in hot water, either not claiming deductions they are entitled to or making mistakes which could get them into trouble with HMRC."

Is there an optimum age at which this should be introduced?

"We believe that children of all ages can benefit from learning about tax. For those in junior school, this could be an introduction to the importance of taxes and the role they play.

“As children move into high school, and start to think about the world of work, there is a role for more practical tax lessons building on these foundations. This could include the importance of checking your first payslip, or knowing when you might need to let HMRC know that you’ve started making money."

Why do you think it's not currently on the curriculum?

"The national curriculum is already very crowded, so it may be that there simply isn’t space.  However, given that every single student will be affected by tax in their life, leaving it out feels like we’re setting them up for failure.

"Tax may be on the syllabus for subjects like economics and business studies, but it actually goes beyond that and forms part of the essential financial knowledge everyone should have.

"Given that tax isn’t part of the national curriculum, it often isn’t touched on in schools as teachers don’t have the time or don’t feel confident enough to cover it. We’re always looking to do more in this area and would be happy to speak to readers who are interested in getting involved."

How can you help?

One of the ATT's objectives, as an educational charity, is to advance public education in tax. As well as producing a series of informative videos for use in schools, they have developed lesson plans and other resources based on HMRC's Junior Tax Facts. Its members are encouraged to support local schools by offering to deliver sessions where teachers do not feel able.

HMRC's Junior Tax Facts is a pack of downloadable resources designed to facilitate the introduction of taxation to children aged 8-13. There is a second pack of resources aimed at older children which covers VAT, national insurance, state benefits and corporation tax, as well as how tax is collected through both employment and self-employment.

ATT technical officer Helen Thornley described her experience of delivering a lesson to primary school children in 2019, with the obligatory Jaffa Cakes a key prop.

Each pack takes around half a day to complete and is designed to be delivered by a teacher, or a volunteer. If you, like me, are concerned about the absence of this key life skill from our education system, why not approach a local school and offer to deliver a session?

Jaffa cakes optional.

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Replies (19)

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By johnthegood
09th May 2024 13:28

Daily pain au chocolat in the lunch hall?? You obviously went to a very different school than I did!!

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Replying to johnthegood:
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By FactChecker
09th May 2024 20:29

.. even the casual reference to 'school trips' (as if they weren't an unaffordable extra for most) and conjugating the verb 'to fight' in Latin!
It's not just envy of how the other half (sorry 5%) live, but if you want to introduce taxation as a topic in the general morass of schools then it's essential to understand your 'audience' (their cultural attitudes and experiences picked up from mates and often disengaged family).

Personally I'm more interested in the poll findings that showed "half the public doesn't understand a basic principle of income tax" ... WHICH basic principle?
Or are you saying that 50% of taxpayers have zero understanding of all IT basics?

My favourite for Top of the Charts can be laid firmly (in terms of blame) at the doors of HMRC ... the belief by many that if you are paid by an Employer under PAYE that:
- you cannot owe any tax because it's been deducted at source;
- if there's any problem then it's the ER's problem to sort out (and pay for it).
The concept that they (as a taxpayer) have full responsibility/liability for their tax affairs is wholly alien to them - as is the concept that PAYE is merely an attempt to estimate the tax due each week/month and so 'smooth' the deductions (that will not necessarily be correct at year end).

With those two legs missing from their understanding, it's no wonder that most people cannot even stand up in any discussion of tax on their earnings ... if you don't have foundations & footings then you can't build new knowledge on top.

Why do I blame HMRC?
Because I spent (wasted) a lot of time between around 2000 - 2015 talking to various senior bods there about this fundamental misunderstanding and how it was (in my opinion) their duty to tackle this through educational campaigns.
Without exception they looked horrified and (figuratively) ran away - admitting, if I managed to corner one of them, that they were terrified at the thought of loads of better educated taxpayers questioning aspects of their personal tax burden.
And this was *before* they claimed to be under-resourced ... they wanted less work, not more accurate returns or happier 'customers'!

Thanks (6)
Replying to FactChecker:
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By Amy Chin
09th May 2024 20:34

My twins went on a school trip today. They walked to the local care home and played with "hand shaped blue balloons" and planted some bulbs with the residents. Not all school trips have to cost the earth, or in fact anything at all in this case.

Thanks (3)
Replying to Amy Chin:
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By FactChecker
09th May 2024 20:58

Fair enough ... but my (distant) schooldays didn't provide such options; and, before you think silly old codger, nor did my sons 20 odd years ago get such wholesome activities. Hopefully this means that schooling is improving - but if so it's not that noticeable in the State sector of inner London primary & secondary schooling (at least according to a nephew and a niece who teach in them).

Anyway, my fault for hitting 'Post' before I'd got going on my comment ... the fear of the disappearing post being only too present (so post is like Save before adding more thoughts)!

Hopefully the rest of my comments/opinions/thoughts are more 'on topic'.

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By listerramjet
10th May 2024 09:43

Income tax was and still is a temporary tax, introduced to pay for the wars against Napoleon. It still has to be reaffirmed in law every year. But before contemplating brainwashing youngsters about time basic principles were applied to the law. How about index linking both personal allowances and band limits? How about reducing the number of bands? How about taking business tax out of the income tax remit altogether? And ditto interest on savings?
Of course the harder challenge is in explaining the idea that government spending is in some way linked to tax receipts. Not to mention that public services are not free.
Actually you could test the lessons on MPs who really don’t have the first clue!

Thanks (2)
Replying to listerramjet:
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By AndyC555
10th May 2024 10:28

"How about index linking... personal allowances"

If they'd done that in 2010, the personal tax allowance would be around £9,500 today.

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By cathygrimmer
10th May 2024 09:53

When there was talk about adding tax to the curriculum a few years ago I offered to go to my children's school and give the 6th Form a brief talk on the tax system - for free - as I thought it was important than they had some knowledge of something that would probably affect all of them before they went out into the world. I explained that I'd been in the tax business for 30+ years and was an experienced lecturer. I had a brief email of thanks and never heard from them about it again. Surely something so fundamental and important should be covered in PSHE - the E stands for Economic, after all?

Thanks (3)
Replying to cathygrimmer:
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By Dr Fauci
10th May 2024 10:40

Well done you for offering to do your talk "for free".

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Replying to cathygrimmer:
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By Roland195
10th May 2024 11:32

A colleague of mine was practically bundled out of a high school speaking engagement when she mentioned the apprentice route.

None too impressed with explaining maths has got little to do with it either.

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By johnjenkins
10th May 2024 10:02

A very interesting article. Of course something to do with economics (not just tax) should be introduced into the curriculum. These days the penalty regime is so rife, kids need to be warned.
From HMRC's point of view it would be an advantage because a lot of people would probably not go down the self-employed route.

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By Duggimon
10th May 2024 10:25

The maths curriculum from around second year onwards is built around word problems where a scenario to which maths applies is laid out and the skills learned in maths are applied to it.

None of these in the examples I've seen (I do example exam questions from school papers for fun please don't tell anyone) include tax in this even though it's endlessly applicable to learning percentages and ratios.

You wouldn't even need a new subject to include some basic tax knowledge in the curriculum and it would at least give people a foundational base.

Thanks (1)
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By AndyC555
10th May 2024 10:26

"...obligatory Jaffa Cakes a key prop.

Each pack takes around half a day to complete"

It's never taken me half a day to complete a pack of Jaffa cakes.

Thanks (4)
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By Dr Fauci
10th May 2024 10:37

"A little learning is a dangerous thing ;
Drink deep, or taste not the Pierian spring..."

Once you start teaching tax to kids, the bright ones might suddenly click that the whole system is designed to keep them imprisoned as debt slaves. God forbid that suddenly they might ask inconvenient questions like why do governments p1ss taxpayer money up the wall on things like foreign wars, HS2, housing illegals, and a long list of etceteras. Far better to keep them dumbed down and unquestioning, teach them pronouns and that there are over a hundred genders.

Next thing you'll be wanting to teach them about one of the greatest frauds that mankind knows is inherently fraudulent but simply goes along with. And no, I am not talking about Climate Change, but rather our dear friend Central Banking. Stop with this madness!

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Replying to Dr Fauci:
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By johnjenkins
10th May 2024 12:00

The kids already know that. Why do you think that the talent we once had is not coming through? just look at the world politicians. You have a toss up between Biden and Trump to see who is in charge of the most powerful nation, yipes.

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By dmmarler
10th May 2024 11:32

In my experience very few non-accountants even start to understand tax, so cannot pass anything on to their offspring. Equally, basic legal concepts are not appreciated. People seem to think it is all unimportant and beyond them. It would be far better to teach these life skills than latin, but they will have to have new tutors ... (I seem to recall doing french homework in latin lessons.)

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Jake Smith, AccountingWEB
By Jake Smith
10th May 2024 13:30

Absolutely agree Amy, when I was at a previous employer we organised basic budgeting and finance sessions with the local comprehensive. I volunteered and was pretty depressed about the experience. Anything that wasn't going to be in an exam was seemingly of little interest to the kids (around 16 years old doing business studies). I think it needs to be put onto the national curriculum and possibly part of a compulsory subject like Maths for it to have any effect.

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By tonyaustin
10th May 2024 14:48

I'm surprised that as many as 50% understand the basics of IT other than it's deducted from pay under PAYE or you have to get someone to help you complete a tax return if you are not an employee.

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Replying to tonyaustin:
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By johnjenkins
10th May 2024 15:03

Perhaps "knowing" and "understanding" were mixed up.

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paddle steamer
By DJKL
13th May 2024 12:32

Problem with teaching tax-

Teaching the computations etc is simple enough EXCEPT they change all the time and therefore as a life lesson are limited, you will end with a population understanding how things were when they were say 14 or you teach them what is new each school year thus totally confusing them and make matters worse.

Or you teach them the philosophy of tax, why we need it, what it provides, but then one gets into the slippery world of politics, choices, what is necessary, core, what is merely desirable, what is merely desirable for some but not all etc etc. Whilst school economics classes flirted with these difficulties , politics was not up close all the time, with tax policy I suspect it would be a dangerous area of discussion with a great danger of cementing very firm but barely studied points of view in its students.

Do I want quasi politics in schools, no, I had enough issues with suggesting to my kids there were different ways certain events in history might be viewed, and getting them to see their school curriculum was not the Word of God, never to be contested, but usually a simplified approach modified to their ability to understand.

Mortgages, yes, Pensions, yes, Compounding, yes, Student Loans, yes, HP, yes, Life Insurance, yes, general insurance, yes, but tax and NI deductions should imho only be taught to a very limited extent with very limited details re bands, allowances, rates, to teach the moving target of income tax and NI is a recipe for long term public confusion unless the population is to attend a refresher course every year of their life after they leave school (Incorrect knowledge often being more dangerous than no knowledge)

I would wish to see precise details re the curriculum, how it was to be taught and to what age bands.

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