The self assessment tax return system has been with us for over twenty years now and it is certainly not simple. Pensioners in particular find that they are required to submit a tax return each year to report their various different sources of pension and savings income and to pay a small amount of tax.
To avoid sending tax returns to such individuals, HMRC has started to issue what it calls a ‘simple assessment’. This is a tax calculation, with a tax bill attached. The simple assessment arrives as a letter and we should receive a copy as your tax agent. The letter will state when the tax is payable, normally by 31 January 2018.
The simple assessment represents HMRC’s view of what your income is and it may contain estimated figures, so it is important to check the tax calculation against documents such as bank statements and P60 forms. If you don’t agree with the figures on the simple assessment, you can query them with HMRC or we can do this for you.
The taxpayers who are due to receive a simple assessment for 2016 – 17 are:
• those who started to draw the state pension in 2016 – 17 and who have total income just over their personal allowance for that year; and
• those taxed under PAYE who have an income tax liability for 2016 – 17 which can’t be collected through their PAYE code, perhaps because it is too large.
In future years many more taxpayers will receive a simple assessment instead of a tax return. However, if you have variable amounts of income, such as insurance policy gains or rental income, the simple assessment procedure will not be appropriate. In that case it is best to stay within the self assessment system so that you can report your income, expenses and gains accurately every year on a tax return.