Simple assessment

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 (DWP), employers and other organisations (such as banks) provide to them. It is important to check the figures on the simple assessment calculation carefully, and let HMRC know if there is any missing taxable income.

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 PAYE system at all, or those who only have a small amount of PAYE 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.

The simple assessment process

Simple assessment calculations are usually issued in the summer months following the end of the tax year.

HMRC may 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)
• bank interest (which they receive from the financial institutions)

  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.

• If you need to let HMRC know about additional taxable income that ought to be included on your simple assessment calculation then you should contact them. You should do this before 5 October following the end of the tax year. If HMRC have already issued a simple assessment calculation, they will issue a revised version.

Right of appeal

If you disagree with the simple assessment, you have an initial appeal period of 60 days from the date of the simple assessment.

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.

If paying by cheque, you must clearly write the reference number from the simple assessment letter on the back of the cheque. Your payment reference number will be 14 characters starting with an ‘X’. It is also a good idea to write your name and National Insurance number on the back of the cheque.

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.