Yahoo Finance Brits to spend 19 million hours on tax returns
Britons will spend 19 million hours filling in their tax returns this year, according to new research by consumer group Which?
One in five (20%) Brits managed to fill out their tax return in less than one hour, but one in 10 respondents (9%) said they spent more than five hours on the task, in the survey of 4,000 people.
The average time taken to complete a return is two and a half hours, the survey found.
The research also exposed gaps in the UK public’s tax knowledge, with only three out of 4,000 respondents able to answer all seven questions asked about general tax rules correctly.
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When asked if tax is payable on interest earned in children’s savings accounts, only one in six people (17%) knew that this is the case.
If parents put money into their child’s savings account, and it earns interest of more than £100 ($136) in a tax year, all of the interest earned will be added to the parent’s savings income and taxed as though they earned it. The allowance increases to £200 if both parents put money in a child’s account.
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Brits were also confused about capital gains tax (CGT) as around a third wrongly thought that you have to pay CGT when selling your main home and a further third said they didn’t know anything about it.
Almost half (48%) of people wrongly thought you don’t have to file a tax return if you are taxed by PAYE.
You do not have to fill out a tax return if you are employed and your only income is from your job. However, if you also receive income from renting a property, do extra freelance work or make a profit after selling an asset, you will need to declare it on a tax return.
Which? is urging people to complete their tax returns early to avoid the penalties for missing the deadline.
Taxpayers have to pay an immediate £100 fine for filing late, and the cost of late returns can reach thousands, depending on how late it is and the amount owed. A return filed three months late could cost £1,000.
Jenny Ross, Which? Money editor, said: “Our findings show just how time-consuming and laborious tax returns can be for many, and there are clear gaps in the nation’s knowledge of the tax system.
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“As many tackle their tax returns in the coming days, a clear understanding of the tax system will be invaluable and help thousands avoid mistakes, which could prove costly.
“To avoid a late submission and a hefty fine, we’d recommend using one of the streamlined tools that can guide users through the process quickly with reduced stress.”
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