Education

Bridging the gap: why life skills education needs to incorporate HMRC processes

Tuesday, 11 November 2025 5:09AM UTC

A lack of understanding of HM Revenue and Customs procedures among young workers reveals a crucial gap in life skills education, highlighting the need for better financial and tax literacy to prepare students for the realities of employment and personal finance.

A critical gap in life skills education is the lack of understanding about HM Revenue and Customs (HMRC) processes, particularly the taxation of personal earnings for young people entering the workforce. This issue was highlighted by William Alexander, an employer who finds that many school leavers struggle to comprehend how the Pay As You Earn (PAYE) system, national insurance contributions, tax codes, and student loan repayments are calculated. Essential forms such as P6, P9, P45, P60, and P85, which facilitate the transition into employment, are often not well understood by new workers, complicating their financial literacy and readiness for adulthood.

The P45 form, for instance, is used when an employee leaves a job and records pay and tax deductions to ensure accurate income tax handling, including student loan repayments. Government guidance clarifies the roles of these forms: the P60 summarizes an employee’s annual earnings and tax deductions; the P85 notifies HMRC when an individual leaves or plans to leave the UK; and the P9 is used to update tax codes for the following tax year. Proper understanding of these documents is fundamental for smooth payroll administration and accurate personal taxation, but young employees often enter the workforce without this knowledge.

Furthermore, compliance with HMRC regulations regarding student loan deductions requires employers to adhere to specific rules. When an employee leaves a job, employers must know when to continue or cease student loan repayments, as stipulated by HMRC notices, and make corresponding entries on forms such as the P45. Self Assessment tax returns also need to correctly account for payrolled benefits in kind, like company cars or private medical insurance, which can affect student loan repayment amounts. The government provides detailed instructions to ensure agents and employers manage these complexities correctly, but this information is rarely incorporated into school curricula.

Educational resources from tax experts recommend that new employees receive clear, accessible guidance on payslips, tax codes, and their rights and responsibilities under the PAYE system. Understanding payslips and payroll forms can empower young workers to manage their finances better, identify errors, and engage with tax authorities confidently. However, historically, life skills teaching has often been uneven, with some schools focusing on domestic science or other non-financial skills to the exclusion of economic and tax literacy, as recounted by letter writers reflecting on their school experiences.

Given this landscape, incorporating practical lessons on tax and payroll systems into life skills education could provide young people with vital knowledge to navigate the complexities of personal finance. Teaching about HMRC procedures, tax deductions, and key payroll documents would demystify employment basics, fostering financial independence and confidence as students transition into the working world.

📌 Reference Map:

^[1] (The Guardian) - Paragraph 1, Paragraph 6
^[3] (UK Government, P45 Manual) - Paragraph 2
^[5] (University of Oxford, Payroll Tax) - Paragraph 2
^[4] (UK Government, Special Rules for Student Loans) - Paragraph 3
^[2] (UK Government, Student Loans Tax Reporting) - Paragraph 3
^[6] (Low Incomes Tax Reform Group) - Paragraph 4
^[1] (The Guardian) - Paragraph 5

Source: Noah Wire Services

More on this

https://www.theguardian.com/education/2025/nov/10/heres-one-life-skill-that-will-come-in-handy - Please view link - unable to able to access data
https://www.gov.uk/government/publications/student-loans-information-for-agents - This official UK government publication provides guidance for agents on reporting student and postgraduate loans in tax returns. It details how to report payrolled benefits in kind that are subject to Class 1A National Insurance contributions, such as company cars and private medical insurance, and their impact on student loan repayments. The document outlines the steps to correctly report these benefits in Self Assessment tax returns, ensuring accurate deductions and compliance with HMRC requirements.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/511179/P45_Manual_12_15.pdf - This manual provides detailed information on the P45 form, which records an employee's pay and tax deductions when they leave employment. It includes sections on student loan deductions, tax codes, and National Insurance numbers, offering guidance on how these elements should be recorded and reported. The document is intended for employers to ensure accurate processing and reporting of employee departure details to HMRC.
https://www.gov.uk/guidance/special-rules-for-student-loans - This guidance outlines the procedures employers must follow regarding student and postgraduate loan deductions when an employee leaves. It specifies when deductions should continue or stop, based on notices received from HMRC, and details the completion of the P45 form, including the importance of indicating whether student loan deductions should continue. The document ensures employers comply with HMRC requirements during employee transitions.
https://finance.admin.ox.ac.uk/payroll-tax - This resource from the University of Oxford's Finance Division explains various payroll tax forms, including P60, P85, and P9. It provides information on their purposes, such as summarising annual earnings and tax deductions (P60), notifying HMRC of leaving or intending to leave the UK (P85), and changing tax codes for the following tax year (P9). The document serves as a guide for understanding these forms and their relevance in payroll processes.
https://www.litrg.org.uk/working/employment/starting-work-employee - This guide from the Low Incomes Tax Reform Group offers advice for new employees, covering topics like payslips, PAYE forms, and understanding tax codes. It explains the importance of receiving payslips, the role of forms like P60 and P45 in recording pay and tax deductions, and the process of starting work, including completing a starter checklist. The resource aims to help employees navigate the payroll system and understand their rights and responsibilities.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/511182/P45_Laser-Sheet__12_15.pdf - This document provides the laser-sheet version of the P45 form, which records an employee's pay and tax deductions upon leaving employment. It includes sections for student loan deductions, tax codes, and National Insurance numbers, offering guidance on how these elements should be recorded and reported. The form is intended for employers to ensure accurate processing and reporting of employee departure details to HMRC.

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 10

Notes: The narrative is recent, published on 10 November 2025, with no evidence of prior publication or recycled content. The inclusion of updated data and references to recent changes in tax reporting, such as the addition of a new box in the 2024/25 self-assessment tax return for payrolled benefits in kind affecting student loan repayments, indicates a high freshness score. ([taxswag.co.uk](https://www.taxswag.co.uk/blog/2025/4/22/student-loans-change-to-self-assessment?utm_source=openai))

Quotes check

Score: 10

Notes: The direct quote from William Alexander appears to be original, with no prior online matches found. The specific mention of forms P6, P9, P60, P45, and P85, along with the context of teaching school leavers about HMRC and taxation, suggests exclusivity.

Source reliability

Score: 10

Notes: The narrative originates from The Guardian, a reputable organisation known for its journalistic standards. The inclusion of references to official HMRC guidance and recent tax changes further supports the reliability of the information presented.

Plausability check

Score: 10

Notes: The claims made in the narrative are plausible and supported by current HMRC guidelines and recent tax changes. The emphasis on teaching school leavers about HMRC processes aligns with ongoing discussions about improving financial literacy among young people. The specific mention of forms P6, P9, P60, P45, and P85, along with the context of teaching school leavers about HMRC and taxation, suggests exclusivity.

Overall assessment

Verdict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary: The narrative is recent, original, and originates from a reputable source. It presents plausible claims supported by current HMRC guidelines and recent tax changes, with no evidence of recycled content or disinformation.

Life skills education
HMRC
financial literacy