After a seven-year delay, HMRC will start issuing 'Simple Assessments' to 560,000 individuals with tax outstanding for 2023/24 in early Autumn. What are Simple Assessments and why did it take so long to make them?
Simple Assessments are designed to be used by HMRC to collect outstanding tax liabilities that cannot be collected at source, i.e. by PAYE in cases where the normal criteria for completing a Self Assessment tax return are not met.
HMRC may send out a Simple Assessment letter if you:
- Owe Income Tax that cannot be automatically taken out of your income.
- Owe HMRC £3,000 or more.
- Have to pay tax on your State Pension.
HMRC will issue a Simple Assessment Calculation (SAC) identified as a 'PA302' to individuals with tax to pay where HMRC believes it has full information from third parties.
- Information HMRC can obtain directly from third parties includes details from employers, pension providers, banks and building societies, and other government departments including the Department for Work and Pensions (DWP).
- The SAC can also include adjustments such as Employment expenses, other untaxed income, and higher rate relief for Gift aid and Personal pension contributions.
Individuals must check the figures included and consider if they have other sources of income or claims for relief that should be included.
- Particular attention should be paid to any interest amount included as the SAC will not distinguish between bank accounts and HMRC may include estimates.
- The letter (or in practice, paperless equivalent) will explain how to pay the amount due and what the taxpayer should do if they disagree with the calculation.
- Where relevant, figures must be disputed within 60 days of the day of the SAC.
Simple Assessments were originally introduced through the Finance Act 2016 for rollout in 2017. This was delayed, first by Brexit and then by COVID-19.
It is thought about 140,000 pensioners with state retirement income as their only source will receive a simple assessment where that income exceeds the personal allowance of £12,570.
Individuals who will complete a Self Assessment tax return for 2023/24 should not receive a PA302. Anyone who receives a Simple Assessment error should ask HMRC to withdraw it.
Notification of chargeability to tax
Simple Assessment does not override the responsibility of taxpayers to inform HMRC if they have other untaxed sources of income or gains.
Taxpayers a deadline of 5 October to inform HMRC if they have Untaxed income irrespective of whether the criteria for filing a Self Assessment tax return are met.
Penalties can be issued and tax assessments can be made for up to 20 previous years for Failure to Notify Chargeability.
It is not required to give notice under subsection (1) for that year unless the person is chargeable to an amount of Income Tax or Capital Gains Tax for the year of assessment that is not included in the assessment.
If untaxed income is already included in an HMRC P800 calculation for PAYE, or a PAC302, that is taken to automatically fulfil this obligation.
Useful guides on this topic
Simple Assessment
What is Simple Assessment? Who does it apply to? Can you appeal a Simple Assessment?
Register for Self Assessment
How to register for Self Assessment. If you need to file a Self Assessment tax return and you have not previously registered for tax and you also need to pay your Income Tax liability (both of which should be done by 31 January), you need to register for Self Assessment and obtain your own Unique Tax Reference code (UTR).
Failure to Notify Chargeability
What is failure to notify chargeability to tax? What happens if you fail to notify HMRC about your taxes? What penalties apply for failing to notify HMRC that you have a tax liability?
Do I have to file a tax return?
When does an individual need to file a tax return? In what circumstances do HMRC need to be notified that a tax return is required?
Gift Aid
How is tax relief for Gift Aid donations received by individuals? How do donations impact the personal allowance? When can Gift Aid donations be carried back to an earlier tax year?
Pensions: Tax rules and planning
What tax rules apply to pensions? What tax relief is available? What tax charges can arise? What planning opportunities are there?
Annual expenses for employees: How to claim
A guide to explains the different ways employees can claim tax relief for the employment expenses they incur as part of their jobs.
Savings income: How interest is taxed
What is savings income? How is savings income taxed? What allowances are available? What is the Accrued Income Scheme?
External links
