Tax too Complex for Many

More than a quarter of young adults in work have no idea how much tax they have to pay, according to research by ICAEW.

The poll marks this year’s tax freedom day – the day employees start to see their annual earnings go into their own pockets rather than government coffers. The study found 28% of 18 to 24 year-olds did not understand what they pay in tax and national insurance while across all age groups, 16% of workers polled did not know what rate of tax they have to pay.

Source: Independent i

We Say: Most people know that there is a basic rate of tax is 20%, a higher rate of 40% and – somewhere off in the stratosphere inhabited only by the super-rich – a rate of tax which jolly well ought to be 50% but which that Osborne man reduced to 45% for the benefit of his Eton chums (we do read the tabloids, you know). Beyond that it gets a bit hazy for a chap. 

There’s a 10% rate on dividends (but covered by a tax credit of that amount). It’s 32.5% or 37.5% tax on dividends for higher-rate payers (which nets down to an effective 25% or 30.55% by the time you’ve taken the tax credit into account). Then there’s the effective 60% rate for income between £100,000 and £120,000. And there’s National Insurance – a tax in all but name – which you start paying at a lower point than that at which you start to tax. Not forgetting the tax on Child Benefit (not called a tax, of course, but the “High Income Recovery Charge”) the rate of which depends entirely on the number of children for which you (or your spouse or partner)are claiming benefit – a rate of 11% if you have one child and 25% if you have three. So, as your earnings rise, our so-called “progressive rates” of tax (including NIC and HIRC) rise from 0% to 47% – but do so via rates of perhaps 12%, 32%, 42%, 67% and 62% (in that order). 

The only astonishing thing in the ICAEW’s survey is the startling assertion that 84% of workers claim to know what rate of tax they have to pay. We bet they don’t. 

For more information, please contact London Accountants Berg Kaprow Lewis.



Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.


Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.


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