Simple assessment
Simple Assessment is a method of assessing income tax due in certain straightforward cases where a Self Assessment tax return is not required and where tax cannot be collected via the Pay As You Earn (also known as PAYE) system.
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Introduction
Individuals in Simple Assessment do not have to submit a Self Assessment tax return to pay tax on the taxable part of their income. Instead, HMRC send the individual a calculation of tax owed for the tax year (the calculation is referred to as a PA302). This will be sent by post, but should also be available to view in the taxpayer’s personal tax account.
HMRC base the Simple Assessment on information that the Department for Work and Pensions (also known as DWP), employers, pension providers and other organisations (such as banks) provide to them. HMRC will also include any other income and tax reliefs that you tell them about.
It is important to check the figures on the Simple Assessment calculation carefully, and let HMRC know if there are any missing amounts.
When HMRC use Simple Assessment
HMRC use Simple Assessment to collect tax for certain taxpayers who:
- do not fall within HMRC’s Self Assessment criteria and are therefore not required to prepare a tax return.
- do not pay tax under the Pay As You Earn system at all, or those who only have a small amount of Pay As You Earn income where the tax cannot be collected via a P800 (a PAYE reconciliation).
Often, Simple Assessment applies to people with only a state pension, or HMRC use it for other simple cases, such as collecting tax on savings interest.
Simple Assessment is not used if you have already received a P800 tax calculation.
Simple Assessment is also not used if HMRC have to reconcile your income tax for more than one tax year.
It is not possible for an individual to choose to register for Simple Assessment. HMRC decide when to issue a Simple Assessment. However, you may need to provide some of the information to HMRC to ensure they are aware of all your taxable income and issue the Simple Assessment accordingly, as outlined below.
If HMRC issue a Simple Assessment to an individual for any year in which they will file (or have already filed) a Self Assessment tax return, the individual should contact HMRC and ask for the Simple Assessment to be withdrawn – see GOV.UK for contact methods.
The Simple Assessment process
HMRC usually start to issue Simple Assessment calculations in the summer months following the end of the tax year.
HMRC may automatically issue the Simple Assessment calculation based only on data they have available to them such as:
- state pension (which they receive directly from the Department of Work and Pensions)
- savings interest (which they receive from the financial institutions)
If HMRC expect to receive details of other taxable income they are likely to issue the calculation later in the year. For example, if you had taxable bank interest from a savings account in the previous year, they may not issue your Simple Assessment calculation until they have reconciled the savings interest information they receive from the banks and building societies.
HMRC will sometimes need to issue one or more updated Simple Assessment calculations. This is because they might receive details of an individual’s additional taxable income after they have issued the first version of the calculation. For example, this might be the case where details of savings interest is shared with HMRC after they have issued the first version of the calculation.
Checking the calculation
It is important that you check the Simple Assessment calculation to ensure it is correct and includes all your taxable income.
In particular, bear in mind that there may be other sources of income that HMRC will not be aware of unless you notify them. This can include things like dividend income, or rental income that falls below the Self Assessment reporting limits.
You may not immediately recognise the figures shown on your tax calculation due to the way the information is presented. For example, a savings interest figure will be the total of the interest paid to you across all of your savings accounts, so you will need to add up the amount from each account and compare that with the figure on your tax calculation. Sometimes, errors can arise within the information, for example, amounts being allocated to the wrong person’s record, or non-taxable income (such as ISA interest) being shown as taxable income.
You can contact HMRC to request further details on any figures they have included in your Simple Assessment calculation – they should be able to tell you the source of their information and provide a breakdown of any totals they have included.
If you need to let HMRC know about additional taxable income that ought to be included on your tax calculation then you should contact them before 5 October following the end of the tax year, even if you have not yet received a Simple Assessment calculation. If HMRC have already issued a Simple Assessment calculation, they will issue a revised version.
We explain about your legal obligation to notify HMRC about a liability to tax on our page How tax is collected. The Simple Assessment calculation should also reflect any claim for the marriage allowance or married couple’s allowance made by you or your spouse or civil partner.
If you pay tax at a rate above the basic rate it is important that you ensure that the tax calculation includes amounts on which additional tax reliefs may be due, such as Gift Aid donations and some types of pension contributions, as these may reduce your tax liability.
Right of appeal
If you disagree with the Simple Assessment you have an initial appeal period of 60 days from the date shown on the Simple Assessment. You should do this if you believe the income figures are wrong or incomplete, or the calculation does not include some tax relief to which you are entitled.
HMRC may decide to postpone all or part of your Simple Assessment while they consider any of the matters raised in your appeal. They must notify you in writing of the aspects of the assessment that are postponed and, if only part of the calculation is postponed, the amount of tax that you must pay. After considering the appeal HMRC must write to you to let you know their decision and confirm or withdraw the original assessment, and issue an amended Simple Assessment if appropriate. They will also confirm any additional tax you must pay.
If you do not object to the Simple Assessment within 60 days of it being issued, it is automatically finalised.
Payment of tax
Tax payable under a Simple Assessment is due on 31 January following the end of the tax year (the normal payment date for Self Assessment income tax), or three months after the date of the Simple Assessment, if that is later.
Payment can be made:
- online via your personal tax account
- via the HMRC app
- by making a bank transfer
- by sending a cheque.
When making your payment by bank transfer or cheque you must quote the reference number from the Simple Assessment letter. This will be referred to as the ‘payment reference’ or ‘charge reference’, and will be 14 characters starting with an ‘X’. If paying by cheque write the reference on the back of the cheque as well as your name and National Insurance number.
You can read more about the methods of paying your Simple Assessment bill, including the relevant bank details, on GOV.UK.
Interest and penalties
HMRC can charge interest on underpaid tax under Simple Assessment.
At the time of writing, late payment penalties do not apply to late paid tax under Simple Assessment.
Record-keeping requirements
There is no legal requirement for people in Simple Assessment to keep records.
You may wish to keep some records however, for your own purposes.
We provide more information on our separate page on tax record-keeping, which you might find helpful.
