Simple Assessment - Ending The Tax Return

HMRC has unveiled details of the simple assessment system for some pensioners and PAYE taxpayers. The two groups will no longer need to provide information under self assessment because returns will be pre-populated with data from other sources.

The option will be available to taxpayers from September 2017 for:

  • new state pensioners with income more than the personal tax allowance in 2016-17; and
  • PAYE taxpayers who have underpaid tax and cannot have it collected through their tax code.

What HMRC say……

Currently, around 11 million people have to complete a tax return every year to provide HMRC with information about their income. With greater use of existing data HMRC can now find the information for some of those customers elsewhere without needing them to complete a tax return. This new system is called Simple Assessment.

From September 2017 HMRC will remove the need for some customers to complete a tax return, starting with the two groups mentioned above.

All existing state pensioners, who receive state pension over their personal allowance, who have received a notice to file a Self Assessment for the tax year 2016/17 should complete their return as usual. They will be taken out of Self Assessment for the next tax year, 2017/18, and will receive a Simple Assessment notification instead.

Rather than asking customers to fill in a return with lots of information, HMRC will now use data it already holds and calculate what tax is owed.

Customers with more complex tax affairs who continue doing Self Assessment will still benefit from a modernised process in the future. This means they will only be asked for information needed to assess their tax, benefits and credits. HMRC will complete the rest of the information automatically.

HMRC will write to customers from September 2017 with a tax calculation. This could be a P800 or a Simple Assessment letter (PA302).

The letter will show their:

  • Income from pay
  • pensions
  • state benefits
  • savings interest
  • employee benefits

Customers just need to check the information is correct, and if it is they can pay their bill online or by cheque by the deadline in the letter.

If a customer thinks any information is incorrect they have 60 days to contact HMRC.

For instance, if they think amounts used are wrong or HMRC didn’t act on information received.

Should customers miss the deadline they should contact HMRC to discuss their circumstances or financial penalties will be applied in line with current policy.

If customers are not happy with the follow-up response from HMRC, they have 30 days to appeal against their decision.

What does it actually mean though…..

HMRC has already begun writing to taxpayers with a tax calculation which will be either a P800 or a simple assessment letter (PA302). Taxpayers should check the information is correct and, if it is, they can pay any tax due online or by cheque by the deadline in the letter.

A taxpayer who thinks there is an error has 60 days to contact HMRC. If they are not happy with the response from the department, they have 30 days to appeal against the decision.

Pensioners who complete a tax return because their state pension is more than their personal allowance will be removed from self assessment in 2018-19.

The taxpayer willl still need to review the return to ensure accuracy and will have only 60 days to appeal against the return if they believe it is incorrect.

This is therefore shortens the time people will have to gather the information needed to complete their returns.

For example, under self assessment they have nine months after the end of the tax year to compile their information and check they have everything before submitting a return. But under simple assessment the individual will receive a calculation from HMRC and have only 60 days to check it, obtain any further information from their employers or banks, and then agree it or go back to HMRC with amendments.

Failure to respond within the 60 days will lead to financial penalties.

Therefore if you receive a letter from HM Revenue and Customs on this matter, please do not ignore it!

If in doubt please contact us as soon as possible so that the 60 day deadline is not missed.