HMRC’s new Simple Assessment: Could it cost you more in tax?

HMRC’s new Simple Assessment: Could it cost you more in tax?

HMRC has changed the way in which they will assess some taxpayers, removing the need for these individuals to complete a Self Assessment Tax Return, which came into effect from September 2017.

However, the new ‘Simple Assessment’ has come under fire for making it more likely that people will overpay tax. In this article, we review the changes.

Who does this affect?

Simple Assessment will initially be used for two groups. Those who pay tax via PAYE, have underpaid and can’t have the extra tax taken through their tax code. Secondly, for those who are new state pensioners whose income is more than the personal allowance.

HMRC have been writing to these taxpayers since September 2017 to make them aware of the change. This has been in the form of a P800 or a Simple Assessment Letter (PA302)

The letter will show your:

  • income from pay
  • pensions
  • state benefits
  • savings interest
  • employee benefits.

Why might Simple Assessment cause me to overpay tax?

For those invited to join Simple Assessment, they will not have to fill out a self-assessment form. HMRC will instead use the data it already holds to calculate how much tax individuals owe and then send them a bill.

The problem is that those individuals will now have to rely on HMRC getting its sums right – which is not always a given.

We say…

“You shouldn’t just assume that the figure provided by HMRC is correct, we always advise checking against your own records and calculations”.

If you are happy with the amount stated then you will be able to pay the tax owed. However, if you are not satisfied this is correct, you will have just 60 days to contact HMRC and dispute the amount.

Previously you will have had nine months after the end of the tax year to pull together your information and check you had everything. Now, those using the Simple Assessment will receive a calculation from HMRC and will have just 60 days to review this and get any further information from their employers or banks, before agreeing, or going back to HMRC with amendments.

And if you don’t manage to check the amount that you pay, how confident will you be that the amount request by HMRC is correct?

If you would like to speak with our tax team regarding our range of personal tax services please contact us.

456 304 Rouse Partners

Rouse Partners

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This information has been produced by Rouse Partners LLP for general interest. No responsibility for loss occasioned to any person acting or refraining from action as a result of this information is accepted by Rouse Partners LLP. In all cases appropriate advice should be sought before making a decision.

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