Why Does Tax Scare Us So Much?

Sara the wealth coach was back on Phil In The Morning this week, and this time we tackled the topic nobody wants to talk about. Tax.

Let’s be honest. The word tax makes most of us want to put our head in the sand and pretend it doesn’t exist.

And that’s exactly what Sara said when she sat down with us — we’re never taught about it, we don’t understand it, and the only thing we ever hear is “avoid it” or “pay less of it.” No wonder it feels scary.

And then there’s HMRC. Sara reckons a lot of people hear those four letters and immediately think they’re out to get me. Sound familiar?

You’d Be Surprised How Many People Can’t Read Their Payslip

Here’s the thing that genuinely shocked me. Sara works with people who don’t even know how to read their own payslip.

Not because they’re daft — far from it — but because nobody ever showed them. It’s that head-in-the-sand thing again. If I don’t look, I don’t have to worry about it.

But Sara’s point is a good one. If you do look, if you do understand what’s going on, you can actually take some control over what you’re paying. And there are allowances out there that plenty of people aren’t using simply because they don’t know they exist.

The Tax Code Trick You Need to Know

Right, here’s a dead simple one. Look at your payslip — yes, your online one, I’m being old-fashioned calling it a payslip — and find your tax code. For most people it’ll read something like 1257L.
Now, add a zero to the end of the number.

That gives you 12,570 — and that’s your nil rate tax allowance. That’s the amount you can earn before you pay any tax at all.

Simple when you know, isn’t it?

Check Your Tax Code — It’s Actually Your Responsibility

This was a big one. Sara was clear: it’s your responsibility to check your tax code is correct. Not HMRC’s. Not your employer’s. Yours.

And tax codes can be wrong for all sorts of reasons. Maybe you used to have a company car and don’t anymore. Maybe you’re on an emergency tax code from a job change.

I was telling Sara about a mate of mine who’d been paying tax on a company car that was taken away ages ago — they’d given him a cash lump sum instead, but the tax code never got updated.

That’s real money going out of your pocket every month for something that doesn’t apply anymore.

Sara says your tax code is usually based on the previous tax year — or even the one before that — so unless you flag any changes yourself, it might not be right. A quick check could save you a fair bit.

Legit Ways to Pay Less Tax

Now, nobody’s saying dodge your taxes. In fact, Sara said something I thought was really refreshing — she actually sees tax as a good thing. It pays for our communities, our NHS, our public services.

She even said that when she pays her tax bill in January and July, she sends it off feeling grateful.

She talked about her mum having cancer treatment and knowing that tax goes towards something incredibly powerful like that.
But here’s where it gets practical. There are fair, legitimate ways to reduce what you pay, even if you’re employed.

The big one? Your pension.

If you pay more money into your pension, you don’t pay tax on it. It’s probably the most powerful way to reduce your tax bill if you’re on a salary.

And here’s the bonus — some employers will match your extra contributions.

Sara’s seen companies matching up to 10% in some cases. That’s free money sitting there if you check your contract and ask the question.

The Takeaway

Tax doesn’t have to be this big, scary mystery. A few simple checks — your tax code, your pension contributions, your payslip — could make a real difference.

And if something doesn’t look right? Just ask. That’s Sara’s biggest piece of advice. Don’t ignore it. Ask the question.

Sara is a wealth coach who joined Phil on Mix 56 to chat all things money. If you missed it, catch up on the conversation and keep an eye out for her next visit.

In the meantime, you can find out more about Sara and her services at Wealth Coach.