Earlier this year, HM Revenue & Customs (HMRC) introduced Simple Assessments for some taxpayers who have, until now, been required to complete Self-Assessment Tax Returns.
The paper-centric concept has been in development for almost 2 years and the computations themselves, PA302’s, began dropping through doors in October.
The Simple Assessment powers are entirely separate to the requirements for individuals to report income through their digital tax account under MTD.
HMRC’s intention is to utilise data that it already holds, such as employment income, benefits and pension payments, to generate an income tax calculation for certain individuals and trusts, without needing a tax return to be submitted.
This sort of information is typically provided to HMRC by employers, pension providers and other Government departments via Real Time Information (RTI).
It is worth bearing in mind that HMRC does not automatically receive details of rental income or dividends, nor does it hold details of self-employment income. Individuals receiving income from these sources will not qualify for Simple Assessment.
Those affected are taxpayers with relatively straightforward financial affairs where HMRC deems that it already has adequate information to be able to calculate the tax owed.
The first groups to be subject to the Simple Assessment regime are people who began receiving a State Pension in 2016-17, where their income exceeds the personal allowance, and PAYE taxpayers who have underpaid tax that cannot be collected through their tax code (an example of the latter is where the amount owed is more than £3,000).
Existing state pensioners, receiving only pension income that is in excess of their personal allowance, will have been within the Self-Assessment regime until now. They will receive Simple Assessment notifications in respect of this year’s (2017-18) income in 2018.
If you receive a Simple Assessment notification, you will have just 60 days to request an amendment, if any of the information in the notification is incorrect.
It is also important to check whether there are any reliefs and allowances you are entitled to. This could be in respect of Gift Aid or employment-related expenses, for example. These must be included on the form and it is worthwhile seeking professional advice at this stage, as identifying entitlement to reliefs and allowances can be a complex task, yet the tax savings can be significant.
Sarah Dixon, Tax Manager at George Hay, said: “Whether a move from self-assessment to simple assessment will benefit those affected is questionable. Putting this new approach into practice, alongside such a complex tax system, is likely to throw up challenges and some taxpayers may end paying the incorrect amount of tax.”
“If you receive a simple assessment, it is essential that you check the details contained within thoroughly – don’t assume that they are correct. If you believe there to be errors, you only have 60 days, from the date of receipt, to gather any relevant information and revert to HMRC with amendments.”
The deadline for the payment of tax under the Simple Assessment regime is the same as that for Self-Assessment; 31 January.
The exception to this is where the notification is received after 31 October each year, in which case payment will be due three months after the date of the notification.
Payment in respect of tax under the Simple Assessment regime can be made either by way of a cheque or by logging into your Personal Tax Account online.
Here at George Hay, whether self-assessment or simple assessment we can help you to understand and fulfil your obligations. Contact us today on 01767 315010, to find out more.