What is Simple Assessment?

A simple assessment is produced by HMRC and is also known as a form PA302. It’s typically issued to an individual who owes income tax from a previous tax year.

HMRC uses simple assessment as a way to recover income tax in simple cases where an individual has not paid enough tax from PAYE income.

The system is designed to simplify the process for taxpayers who have underpaid and eliminates the need for individuals to submit a tax return to pay what they owe back to HMRC (Her Majesty’s Revenue and Customs).

A simple assessment calculation is based on data provided by employers, pension providers and other organisations like the department for work and pensions (DWP).

It’s vital to ensure all the information on your PA302 is accurate and that no essential details are overlooked by HMRC.

Why have I received a Simple Assessment letter?

HMRC issues simple assessment in cases where they believe you have not paid enough income tax from your PAYE income.

It’s usually not used if HMRC have to reconcile your income tax for more than one tax year.

The main reasons given by HMRC for sending a PA302 are:

• You owe income tax that cannot be directly deducted from your current earnings.
• You owe HMRC £3,000 or more in tax.
• You owe HMRC tax on state pension income.

A common reason for underpaying tax is when you have had more than one income source and an incorrect tax code has been used.

In this instance if you’ve not paid enough tax and HMRC can’t recover the shortfall automatically from your current income a PA302 may be generated.

How do I receive a Simple Assessment?

HMRC typically sends you a simple assessment PA302 through the post or via your personal tax account (or both).

Simple assessment is not used if you have already received a P800 tax calculation and the first letter requesting voluntary payment of income tax due.

It’s worth noting that an individual cannot register for simple assessment independently; it is used by HMRC at their discretion.

How do I check my Simple Assessment?

‍HMRC recommends that you review your simple assessment calculation diligently to ensure its accuracy before you make any payment.

A simple assessment review should check the income you’re taxed on (such as earnings from your job, pensions, or government benefits) and any income tax you have already paid.

You can use your physical P45 and P60 forms and/or find the same information online in your personal tax account.

The total earnings and tax deducted figures from your P45 and P60 forms can be used to calculate any tax you are still liable for and compare it to the simple assessment you have received.

Our income tax calculator is available to use as part of your checks by giving an estimation on how much tax you may owe in any of the last four tax years.

Appealing against a Simple Assessment

Initially you can write to HMRC or call them to explain the figures that you believe are incorrect.

HMRC should then write to you to confirm their decision. If you still don’t agree with their simple assessment demand you have the right to appeal.

HMRC asks for any appeal to be made within 60 days from the date the simple assessment was issued.

If no objection is raised within the 60 day period the assessment is automatically finalised by HMRC.

Simple Assessment deadlines

Payment for a simple assessment needs to be made within 3 months from the issue date if it’s received after 31st October.

Otherwise the payment should be made by 31 January of the year following the tax year for which the debt is owed.

Interest and penalties on Simple Assessments

HMRC has the authority and reserves the right to charge interest on underpaid tax and impose penalties for late tax payments in respect of simple assessments.

How to pay a Simple Assessment tax bill

Payment of your simple assessment tax bill can be made online through your personal tax account, via bank transfer or by posting a cheque.

When paying by cheque the reference number from the simple assessment letter must be written on the back of the cheque.

You can pay online without logging in to your personal tax account but you will need your payment reference number from your simple assessment letter.

What should I do if I can’t afford to pay a Simple Assessment tax bill?

If you can’t afford to pay a simple assessment tax demand within the timescales given you should let HMRC know as soon as you can.

In some cases HMRC might be able to help you pay what you owe back by agreeing to a payment plan over an agreed period of time.

Simple Assessment saves time but needs checked

The simple assessment is a significant step by the HMRC towards simplifying the income tax payment process by eliminating the need for individuals to submit a tax return for the taxable part of their income.

It has made the process of paying back underpaid tax through PAYE more straightforward and less time consuming but it’s not a perfect system meaning carrying out your own due diligence is important.