HMRC is sending out Simple Assessment letters to 560,000 individuals which includes around 140,000 pensioners.
A simple assessment letter is also known as a PA302 and is used by HM Revenue and Customs (HMRC) if you owe income tax that cannot be automatically deducted from your taxable income or if you have a debt of £3,000 or more to HMRC.
The simple assessment tax calculation will normally be related to an underpayment of tax from the previous tax year which is currently the 2023/2024 tax year that ended on the April 5 2024.
If you have a personal tax account HMRC can send your simple assessment letter to your tax account instead of through the post.
HMRC said: “The amount of tax owed can vary based on an individual’s circumstances. Paying the tax calculated on the letter avoids the need for customers to register for Self Assessment and complete a tax return.”
A PA302 is usually only issued to taxpayers who’s PAYE records show that a self assessment return has not been requested for the year. This basically means if you submit a tax return you wouldn’t normally receive a simple assessment letter.
If the figures on your PA302 simple assessment are accurate, you must settle your 2023/24 tax year simple assessment tax bill by 31 January 2025.
Over 100,000 pensioners receiving simple assessments
HMRC has confirmed that no fewer than 140,000 pensioners will receive a tax bill as their income surpasses the frozen tax threshold which the former chancellor Jeremy Hunt’s decided to freeze until April 2028.
The retirees will soon face a simple assessment letter mainly due to the freezing of tax thresholds combined with a significant rise in the state pension.
The combination of both has resulted in a considerable number of pensioners becoming liable to pay income tax for the first time.
Check your simple assessment tax bill
Before paying your simple assessment tax bill it’s important to check that the figures used in the calculation are correct.
You should cross reference the income and tax details from the PA302 against your P60 and P45 forms received for the 2023/2024 tax year.
The type of income you should review includes the state pension, dividends, personal savings and investments.
HMRC gives you sixty days to call or write to them if you think your simple assessment is wrong. You will be expected to explain which figures you think are wrong and what they should be.
If your initial simple assessment is found to be wrong HMRC will send you a new simple assessment letter.
You can pay back the tax you owe by making a payment in full or instalments before your due date via GOV.UK personal tax account or the secure HMRC app which you can download to your mobile phone from the Google or Apple stores.
