Despite paying it every month, half of UK citizens do not understand how income tax works, a recent study has shown. This survey stems from Nottingham Accountants Archimedia Accounts, who examined monthly search data to discover the tax terms UK citizens find the most confusing.
UK’s most confusing tax terms
| Rank | Tax Term | Average Monthly Search Volumes |
| 1 | HMRC | 766,000 |
| 2 | Inheritance Tax | 148,800 |
| 3 | Capital Gains Tax | 78,200 |
| 4 | Individual Savings Account | 73,000 |
| 5 | Personal Allowance | 43,000 |
| 6 | Self-Assessment Tax Return | 41,100 |
| 7 | Value Added Tax | 40,150 |
| 8 | Compound Interest | 33,100 |
| 9 | Income Tax | 31,900 |
| 10 | National Insurance Contributions | 31,340 |
HMRC is the number one most confusing tax term
HMRC has been identified as the tax-related term that causes the most confusion among people, with an average of 766,000 monthly searches, highlighting just how widespread the uncertainty is. While every person in the workforce would have filled out an HMRC form at one time or another, the term seems to be causing some confusion.
Chris Demetriou, co-founder of Archimedia Accounts, tells Digital Journal: “The abbreviation stands for His Majesty’s Revenue and Customs, which is a department of the government that deals with assessing the amount of tax people need to pay, along with collecting all taxes. Every person in the workforce, regardless of being an employee, self-employed or a freelancer, is required to report their earnings to the HMRC, so they could work out the amount of tax due. This tax is then used to fund the public services in the UK and provide targeted financial support to families and individuals, as well.”
Inheritance Tax is the second most confusing tax term
Hitting 148,800 average searches per month, the second most confusing term is Inheritance Tax. With the term appearing often in the news recently due to increases in the tax, it seems natural that people want to fully understand what it means.
Demetriou explains: “Inheritance Tax refers to the tax that will be charged on any estate, including possessions and money you have after your death and is calculated based on a number of criteria. During the 2025/26 tax year, the first £325,000 of an estate is Inheritance Tax-Free – for any amount above that, an Inheritance Tax of 40% is charged. So for example, let’s say you inherit £500,000, that means you would need to pay £70,000 in tax.”
Capital Gains Tax is third on the list of most confusing tax terms
Coming third, with 78,200 average searches each month, is Capital Gains Tax. Although it’s widely used, the tax term still causes some confusion among Brits.
Demetriou clarifies: “Capital Gains Tax, or CGT, is a type of tax you pay upon selling any assets or investments that have increased in value since you obtained them. Some examples of things you’d need to pay a Capital Gains Tax on are: some personal possessions worth over £6,000, property you own, shares that aren’t in an ISA or PEP and business assets. There is a tax-free allowance of up to £2,000 on your overall gains and £1,000 for trusts, but for any sum above that, a Capital Gains Tax is due.”
Individual Savings Account ranks fourth amongst the most confusing tax terms
Individual Savings Account is the fourth tax term Brits Google the most, generating 73,000 monthly searches on average. Currently there is a lot of news on the government’s decision for cash ISA reforms, so no wonder searches for the term are quite high.
According to Demetriou: “An Individual Savings Account (ISA) is an account which provides the opportunity to save and invest your money, while earning tax-free interest or returns on savings and investments. Four main types of ISAs currently exist: a Cash ISA, a Stocks and Shares ISA, an Innovative Finance ISA and a Lifetime ISA. Each tax year you are allowed to put a specific amount of money into an ISA, known as your ISA allowance – for the 2025/26 year that set amount is £20,000.”
Personal Allowance rounds off the top five most confusing tax terms
Fifth on the list is Personal Allowance, with 43,000 average monthly searches. Among the most used tax terms, it still raises questions, which is evident by the average amount of searches it accumulates.
Chris Demetriou outilnes: “A Personal Allowance is the amount of money you can earn per year before you start paying taxes on earnings – this currently stands at £12,570. Talks of the personal tax allowance rising to £20,000 have been circulating, but the Parliament is yet to make any decisions. In the meantime, it’s important for people to stay as informed as possible.”
To derive at these findings, the search analytics tool Ahrefs was used to collect data on the number of average monthly searches for each of the terms, by using various keyword search variations, such as “cgt”, “what is inheritance tax” and “compound interest meaning”, in order to ensure accurate results were being obtained.
