HMRC has issued a policy paper outlining how the new Simple Assessment regime will work. Simple Assessment is a new way of collecting tax designed to make life easier for millions of customers who have had to do Self Assessment tax returns in the past, according to HMRC.
Currently, around 11 million people have to complete a tax return every year to provide HMRC with information about their income. With greater use of existing data HMRC can now find the information for some of those customers elsewhere without needing them to complete a tax return. This new system is called Simple Assessment.
In September 2017, HMRC removed the need for some customers to complete a tax return, starting with two groups:
- new state pensioners with income more than the personal tax 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 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 to 2019.
Rather than asking customers to fill in a return with lots of information, HMRC will now use data it already holds and 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.
HMRC will write to customers from September 2017 with a tax calculation. This could be a P800 or a Simple Assessment letter (PA302).
The letter will show their:
Customers just need to check the information is correct, and if it is they can pay their bill online or by cheque by the deadline in the letter.
Should customers miss the deadline they should contact HMRC to discuss their circumstances or financial penalties will be applied in line with current policy.
If customers are not happy with the follow-up response from HMRC, they have 30 days to appeal against the decision.
- You can read more about HMRC’s digital agenda by going to https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital. Your clients can access their Personal Tax Account by going to gov.uk/personal-tax-account. Applicants will need their National Insurance number and a recent payslip, P60 or passport to sign in for the first time.
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