What is the HMRC Simple Assessment process and who receives it?

Full answer

HMRC's Simple Assessment was introduced to reduce the number of people who need to complete a full Self Assessment tax return. Instead of requiring the taxpayer to file, HMRC uses data it already receives from employers, pension providers and banks to calculate the tax due and issues a calculation directly. Who receives a Simple Assessment? HMRC typically sends a Simple Assessment (PA302 form) to taxpayers with relatively straightforward income that cannot be fully collected through PAYE -- such as: -- Pensioners receiving the State Pension plus a private pension, where total income slightly exceeds the Personal Allowance -- Employees with small amounts of untaxed interest, savings income or dividends (usually below GBP 2,500 of untaxed income) -- People who received a P800 (end-of-year tax calculation) and owe more than GBP 3,000 (which cannot be collected by adjusting the tax code) If your untaxed income is more than GBP 2,500, HMRC will usually ask you to file a full Self Assessment return instead. How the process works 1. HMRC receives data from third parties (employers via RTI, pension providers, banks under the Common Reporting Standard). 2. HMRC issues a PA302 Simple Assessment letter, typically in the autumn after the end of the tax year. 3. You check the calculation. If you agree, you pay by the deadline. 4. If you disagree, you must contact HMRC within 60 days to dispute the figure. Payment deadline You must pay the tax shown on your Simple Assessment within 60 days of the date on the notice (or by 31 January following the end of the tax year if that is later). How it differs from Self Assessment With full Self Assessment, you are responsible for calculating your own tax and filing a return by the deadline. With Simple Assessment, HMRC does the calculation. However, the onus is on you to check the figures and flag errors -- HMRC's data may be incomplete (for example, it may not know about Gift Aid donations, pension contributions, or allowable expenses that would reduce your liability). When you still need to file Self Assessment Even if you receive a Simple Assessment, you may still need to register for Self Assessment if you have self-employment income, rental income above GBP 1,000, capital gains, foreign income, or if you are a higher-rate taxpayer with significant savings or dividend income. A PA302 does not replace the Self Assessment obligation in those circumstances.

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