Majority of people in UK don’t know VAT and national insurance rates
Only one in three people know the rate of VAT and even fewer know how much you can pay into an Isa, a further nine in ten did not know the rate of national insurance contributions, a survey by Vanquis has revealed.
The survey asked 2,000 people ten personal finance questions with multiple choice answers. No contributors got every question correct and the average score was 2.6 out of ten.
The results revealed that four in five people could not identify the correct definition of an annual percentage rate (APR) and nine in ten did not know the rate of national insurance contributions for an employed, basic-rate taxpayer.
The data indicates that half of the population do not know the difference between a standing order and a direct debit and two-thirds are unaware of how much they can earn without paying income tax.
The question which most recipients struggled with was how much can usually be borrowed on a mortgage as a multiple of income. Just 5% correctly identified that it was 4.5 times the borrower’s earnings, The Times reports.
The survey also highlighted substantial differences in knowledge between the sexes, ages, income categories and regions. On average, men scored better than women with 13% answering at least five questions correctly compared to 11% of women. Yet, more women know what the excess on an insurance policy meant.
Older people answered the most questions correctly and those aged 16-24 answered the least. The survey revealed that only 15% of young people knew the annual Isa savings limit, reflecting the issues young people have when attempting to save money.
The data also suggests that the highest earners are more knowledgable about finance than those earning less money, however, scores were low across all income categories. People who earn over £100,000 per year answered 3.6 questions correctly on average, compared with 2.3 by those earning below £15,000. Yet, four in five of the highest earners did not know the minimum wage.