Campaigners urge higher priority for school lessons about money

The Low Incomes Tax Reform Group (LITRG) is calling for financial education – including teaching about tax – to be given greater importance in schools.

LITRG suggests that the Government consider making financial education a separate area of study altogether, rather than teaching it only as a small subset of other subjects, such as citizenship and maths1.

The campaign group believes the need for change is hastened by the ever increasing complexity of taxation and financial products and the increasing amount of debt young people must contend with  – especially those who go on to university. Additionally, the roll-out of digital tax accounts will put pressure on users to be confident in their understanding of personal and business taxation – with the risk that they may accidentally fall foul of HMRC rules which could lead to sanctions.

The charity set out its views in response to a consultation by the All-Party Parliamentary Group on Financial Education for Young People, which closed this week2.

Anthony Thomas, LITRG Chairman, said:

“There are ever greater ways that young people can get themselves into stressful financial situations, which may be partially alleviated with an elementary understanding from a young age of financial affairs.

“Taxation should be given more prominence in financial education lessons which we suggest should be taught as an independent part of the national curriculum and no longer just split between different subjects.

“There are three core areas that must be referenced in financial education: tax and the political/economic system, tax and civic responsibility and tax and mathematics.

“Lessons on the theory and practice of taxation can help these young people to understand their own tax position and seek assistance if it is incorrect. Most schoolchildren will one day become employees or employers and so they need to know about PAYE coding notices and understand deductions from their payslip.  The effect of PAYE and National Insurance contributions (NICs) on pupils and the differences between tax-free and regular savings accounts, VAT and tax credits all help to underscore the value that should be attached to the teaching of tax.”

The LITRG has developed its own lesson guide aimed at 14-16 year olds to help them understand their payslip, after a successful trial at Lawrence Sheriff School in Rugby, Warwickshire. It addresses financial education requirements in citizenship Key stage 3 and Key stage 4 curriculum in England.  LITRG has also developed – with financial support from HMRC – a free independent website called Tax Guide for Students, which covers tax allowances, how income tax is calculated, NICs, claiming a tax refund and how student loans repayments are deducted through the tax system. Additionally HMRC last year published a teachers’ resource pack called Tax Facts, which includes a series of videos designed to provide an introduction to the tax system for 14–17 year olds.

Anthony Thomas added:

“At present, we are concerned that not all teachers are confident in explaining basic tax calculations and issues, therefore reticent to deliver lessons focusing on tax. We think this problem could be solved by providing comprehensive materials which contain full explanations and examples which would assist in delivering an engaging lesson on tax.  We are happy to help schools deliver interesting and informative lessons on tax.”

Notes for editors

1. Financial education is not a completely standalone subject in any of the Home Nations. However, how it is taught is different in each country: in Scotland it is cross curriculum, in Wales it is mainly in maths, in Northern Ireland it is split between maths and personal development and in England it is currently split between maths and citizenship lessons.

2. LITRG’s response to the APPG on Financial Education for Young People can be viewed here.

3. LITRG has prepared a lesson aimed at 14-16 year olds to help them understand their payslip, the documents consist of: Lesson plan – explaining the objectives and materials available for the Your payslip lesson; PowerPoint presentation – Your payslip; Teacher notes – working through the PowerPoint presentation and worked examples; Handout – to be used during the lesson and homework questions. See link here.

4. Low Incomes Tax Reform Group

The LITRG is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. The CIOT’s 17,500 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.