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Simple assessment begins

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HMRC has begun issuing ‘simple assessments’ in the form of a tax calculation (P800) or simple assessment letter (PA302), to certain new state pensioners and PAYE taxpayers with underpayments which can’t be coded out. Simple assessment is a power introduced by Finance Act 2016 with effect from April 2017, allowing HMRC to assess income tax or CGT liabilities using information already held, without the need for individuals to complete a self-assessment tax return. Taxpayers have 60 days in which to challenge incorrect information in a simple assessment.

The following two groups will start to receive simple assessments from September 2017:

  • new state pensioners with income more than the personal tax allowance in the tax year 2016/17; and
  • PAYE taxpayers who have underpaid tax and who can’t have that tax collected through their tax code.

All existing state pensioners who complete a tax return because their state pension is more than their personal allowance will be removed from self-assessment in the tax year 2018/19.

See HMRC Issue briefing: Simple assessment ending the tax return,

Chas Roy-Chowdhury, head of tax at ACCA, stressed the importance of checking this first round of calculations carefully.

‘While the simple assessment notice is likely to be accurate for a taxpayer with one stable income, it is not yet clear how accurate these notices will be for taxpayers who need to take deductions, secondary income sources or other factors, such as pensions or gift aid, into account’, he said.