HMRC introduced simple assessment from 11 September. It starts the process of ending the annual tax return for those with straightforward tax affairs.
Simple Assessment is a new way of collecting tax which will make life easier for millions of taxpayers who have had to do Self Assessment tax returns in the past. No more long forms to fill in – HMRC will send you a calculation based on information it already has and if you agree with the amount, then you just pay the amount due (if any). Or if the calculation is incorrect, you will need to contact HMRC and update them on any changes of circumstances they may not have taken into consideration.
Why is HMRC making changes?
Currently, around 11 million people have to complete a tax return every year, to provide HMRC with information about their income. With the greater use of existing data, HMRC can now find the information for some of their customers elsewhere without needing them to complete a tax return. This new system is called Simple Assessment.
What it means for you
From September 2017 HMRC will remove the need for some of its customers to complete a tax return, starting with two groups:
- New State Pensioners with income more than the personal allowance in the tax year 2016 to 2017
- PAYE customers, who have underpaid tax and who cannot have that tax collected through their tax code
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 to 2017 should complete their return as usual. They will be taken out of Self Assessment for the next tax year, 2017 to 2018, and will receive a Simple Assessment notification instead.
How it will work
Instead of requiring its customers to fill in a return with lots of information, HMRC will now use data it already holds and will 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.
What you need to do next
HMRC will write to its customers from September 2017 with a tax calculation. This could be a P800 or a Simple Assessment letter (PA302).
The letter will show the:
- income from pay
- pensions
- state benefits
- savings interest
- employee benefits
If you receive one of these letters you just need to check the information is correct and if it is, you can pay their bill online or by cheque before the deadline given in the letter. If the information is incorrect, you will have 60 days to contact HMRC. Should you miss the deadline you should contact HMRC as soon as possible.