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Introducing ‘Simple Assessment’

In September 2017, HMRC began rolling out its new Simple Assessment system, with the stated aim of simplifying the tax collection process.

Simple Assessment allows HMRC to assess the income tax and capital gains liability for certain taxpayers, without the need for them to complete a self assessment tax return. HMRC will instead use the data it already holds to calculate the tax owed.

Who is affected?

Back in the 2015 March Budget, the previous Chancellor, George Osborne, announced the government’s intention to phase out the self assessment tax return, in favour of a digital personal tax account, or PTA.

However, Simple Assessment currently only applies to two groups of taxpayers:

  • New recipients of the State Pension, who have income which exceeds the personal allowance for the 2016/17 tax year
  • Individuals who have underpaid PAYE tax, and whose payments cannot be collected via their tax code.

These individuals will no longer need to complete a self assessment tax return. HMRC will write to affected individuals with a Simple Assessment calculation (SAC), in the form of either a P800 or a Simple Assessment letter (PA302).

How it works

The SAC will work out an individual’s liability to tax based on the information provided to HMRC by third parties, such as employers, banks and pension providers. This includes any earnings under PAYE, state or employer pensions, employee benefits and expenses, and savings interest.

The SAC will detail the amounts chargeable to income tax and capital gains tax, the amount payable and how this has been calculated, together with the date payment is due and how the payment can be made.

Taxpayers must carefully check the details on the SAC and pay any tax due by the deadline. Any queries relating to the information provided must be raised with HMRC within 60 days of the issue of the SAC.

Existing state pensioners who have received a notice to file a tax return for the 2016/17 tax year must complete their return in the normal way. In 2017/18 they will receive a Simple Assessment notification from HMRC.

Although we cannot currently access your PTA, we can help with any queries you may have relating to your personal income, as well as offering advice on the correct tax treatment and a range of strategies to help maximise your income.