Employees not engaged with their tax affairs
As part of improving online processes for individuals under the government’s 2010 ‘Digital by Default’ Strategy, HMRC carried out its own research between November 2013 – January 2014.
The purpose of the research was to develop a deeper understanding of the degree to which taxpayers engage with and understand their tax and how a digital platform could make that easier. Face-to-face interviews, each lasting up to one hour, were carried out with 27 individuals in London, Birmingham, Leicester, Bristol, Cardiff, Manchester and Sheffield. The people who were interviewed were those who pay PAYE or who pay PAYE and Self Assessment, and had contacted HMRC in the last 15 months with a tax query or issue.
The interviews were partly structured to focus on individuals’ understanding of tax, their level of engagement with and perceived responsibility for their tax affairs, their reason for contacting HMRC, the journey through their tax issue and response to the concept of the online tax account.
Results of the research produced six key insights crucial to bringing about individual ownership for their personal tax affairs:
- Individual knowledge of how tax works was limited. Whilst a basic knowledge existed, few fully understood how their tax was calculated, what would make it change and how it would change.
- Individuals are not engaged with their personal tax affairs. Due to tax being deducted at source, those paying PAYE tax typically view it as something dealt with by their employer and, as a result, do not feel any need to get involved with it. It is something that happens ‘to them’.
- PAYE taxpayers do not generally recognise their role and responsibilities in managing their tax. Even when they have faced a problem or issue with their tax, they felt it was someone else’s responsibility to manage it, e.g. HMRC, employer or pension provider.
- Individuals do not feel equipped to deal with issues concerning their tax. They are confused by having responsibility for something they are not directly involved in and do not fully understand. This is heightened by unfamiliarity with the system and feeling overwhelmed on the occasions they do attempt to get involved with and understand their tax affairs.
- The concept of an online tax account was appealing but individuals wanted to be sure that information could be accessed easily.
- Individuals had a clear idea of what they wanted from an online tax account, in particular:
- education about their tax and how it works;
- a facility to check their details; and
- the opportunity to interact with HMRC digitally.
In conclusion, HMRC believe that the Online Tax Account has the potential to make a positive change. If it is designed for ease of use and with the ability to educate, it has the potential to create transparency in the personal tax system and provide encouragement to employees to take ownership of their own tax affairs.