“I’ve got to call HMRC again, for the third time this month!” – An investigation into student knowledge of tax and experience with HMRC

I’ve had my own issues with HMRC, particularly because they seem to send me three or four different tax codes a year. Last year, I was working two different jobs (a remote assistant position and a digital ambassador role here at Warwick) alongside my degree. I earned more money from my assistant job than from my ambassador role, yet the combined income put me just over the lowest tax threshold. This meant that any income I earned over the tax-free allowance of £12,570 would be taxed at 20%. However, I received an HMRC letter stating that the money earned from my ambassador role would be allocated to most of my tax-free allowance, leaving only about £1000 of my income from my assistant role tax-free. 

Thankfully, I had enough understanding of the tax system to resolve this, but this whole ordeal made me realise that not everyone would have the same knowledge and support. 

As students, we’re often working a range of jobs alongside our degrees, so how are we meant to know if our tax codes are incorrect? 

Few people expect an organisation like HMRC to make errors like this, but incorrect tax codes are just one of the tax-related issues students face. The Boar reached out to students to gauge their knowledge of the UK tax system and whether they had faced any challenges with HMRC. One third of the group surveyed stated they did not know how to do “literally anything”, including checking their tax code, filing a self-assessment return, or how student loan repayments work. 

One student said they were “surprised by how little some people know about taxes”, and they suggested the key tax knowledge should be taught

So, how can we as students learn more about taxes? In an interview with a former HMRC employee, The Boar was told that HMRC does offer ‘Tax facts’, “in which HMRC employees volunteer to go into schools to teach tax. Unfortunately, this is not done enough, and there are not a lot of volunteers.” While some might believe it should be HMRC’s responsibility to educate people on tax, the teaching and resources required would be expensive. A senior civil servant from a different government sector told The Boar, “I’ve been involved in running different organisations. If I were on the board of HMRC, I would not choose to spend valuable money and resources on educating people when there are enough available resources for people to take responsibility for educating themselves.” 

There is no compulsory tax education. The responsibility for educating ourselves is solely ours, but some students believe there are ways we could be taught about these systems. 

One student said they were “surprised by how little some people know about taxes”, and they suggested the key tax knowledge should be taught in academic enrichment, or some type of compulsory lecture. Another said that these life skills should be covered during secondary education. While responsibility for tax education does not fall to HMRC, when contacted for comment, HMRC told The Boar that they “have created an award-winning marketing campaign to reach 18–34-year-olds, which includes Video on Demand and mobile game advertising as well as social media influencers across channels such as TikTok and Instagram. We’ve also partnered with UCAS, Unidays and universities to highlight the benefits of students downloading and using the HMRC app.” 

Of the students surveyed, 83% said they work alongside their studies, but only 34% of the working student group earn over the £12,570 tax threshold. In our survey, The Boar discovered that only a sixth of those surveyed have had notable experiences with HMRC. A couple of students reported issues with incorrect tax codes, but these were corrected and refunds were issued. However, one student told The Boar, “Getting taxed on work due to having multiple part-time jobs was irritating. My employers were not very helpful, and HMRC took time to sort out refunds. I’m still waiting for around £160 from last summer.” 

The former HMRC employee told us that HMRC “do use automation to identify errors [such as incorrect tax codes], they are not flagged based on students or young people, but they [young people] are likely more prone to errors due to starting jobs for the first time, moving roles more often, and the type of industries that they work for.” 

This former employee also stressed the important role employers have in preventing these issues. “If it’s your first job, you can inform your employer, and they should provide the correct information to HMRC on your behalf.” They said this should help you avoid any emergency tax or incorrect tax codes, but that is not always the case. “HMRC put individuals on emergency tax codes when they do not have information about an individual’s previous employment status. Unfortunately, this often affects students who may not have the correct form (a P45) from their previous jobs.” When The Boar asked about errors that can occur with student loans, the former employee told us there are often “errors in student loans being recalculated before an individual earns above the threshold happens for the same reason as emergency tax. Without a P45 or correct information about whether it’s your first job, it will be assumed that you are over the threshold.” 

HMRC’s systems are pretty archaic so mistakes do happen even when employment statuses are correctly updated

Documents like a P45 (a document you should receive from an employer when you stop working for them) and a P60 (a document from your employer that shows the tax you’ve paid on your salary in that tax year) should prevent these common tax issues from occurring. 

An HMRC spokesperson commented, “Almost 80% of customer interactions with us are via online or automated channels. This includes hundreds of thousands of students and young adults who are already using the HMRC app and our online services to stay on top of their money and tax.” However, the former employee interviewed by The Boar said “HMRC’s systems are pretty archaic so mistakes do happen even when employment statuses are correctly updated.” They also told us that it can often be difficult to get things like tax codes updated quickly, “as phone lines are extremely busy and from my experience customer service do not always action requests which can lead to the need for multiple phone calls.” 

These statements made by our source match HMRC’s own performance data. Their data shows that 48.7% of Tier 1 complaints (a first instance complaint) and 59.2% of the Tier 2 complaints (a revisited complaint) were upheld. HMRC have also stated that the government has identified improving customer service performance as a key priority for HMRC. 

HMRC is investing £500 million in digital services so more people can manage their tax online quickly and easily

So how can students best educate themselves both on tax processes and what to do should errors occur? When The Boar asked the former HMRC employee what advice they would give students and young people, they said the following: 

“Know your rights, always request a Payslip. Under the Employment Rights Act 1996, all UK employees are entitled to receive a payslip from their employer. If an employer refuses to provide a payslip, then there is a risk that they are not operating a PAYE system, which means you could be working illegally, which can affect your rights and pension eligibility later in life.” 

“Always request a P45 when leaving employment and always leave on good terms – letting them know when you intend on leaving to ensure they act promptly with such requests.” 

When The Boar contacted HMRC for comment, we were told that HMRC is investing £500 million in digital services so more people can manage their tax online quickly and easily. The Boar was also told that HMRC are launching a new ‘tax facts’ digital hub next month, so be sure to check it out when it goes live to learn more. 

Understanding the tax process can seem daunting, but resources are available. A couple of great places to start are the government website: https://www.gov.uk/income-tax and Money Saving Expert: https://www.moneysavingexpert.com/benefits/.