Simple assessment – putting an end to Self Assessment

HMRC is revolutionising the whole tax system by its initiative of MTD. This is even expected to bring an end to the self-assessment.

While MTD will make life of millions of people who have to complete the tax return to give information to the HMRC about their income easier, it will reduce HMRC`s overheads and make the tax administration more effective.

Although the development of personal tax account and other MTD for individuals have been put on the hold to ensure sufficient capacity to deal with the Brexit related priorities. The tax affairs of some of its customers will be dealt under Simple Assessment-a new way of collecting tax.

HMRC has started with two groups of customers 1) new state pensioners 2) PAYE customers.

  • new state pensioners whose state pension is more than the personal tax allowance in the tax year, and the tax due can’t be collected through their tax code
  • PAYE customers who have underpaid tax and who cannot have that tax collected through their tax code

All existing state pensioners who are already in Self -Assessment and have received a notice to file a Self- Assessment tax return for the tax year should complete their return as usual. Some of the pensioners must have been issued a Simple Assessment notification during the year. This means they have been taken out of the self -assessment.

Their tax affairs will be therefore be dealt within the PAYE system and the Personal tax account.

The letter that you will receive will contain your Income from pay, Pensions, State Benefits, Savings interest, Employee benefits. It is important to note that on receiving , the Self- Assessment Taxpayers review the P800 carefully as the information HMRC holds is not always correct.

How will it work? HMRC already has our information. For example, Information on employment income, benefits and pension payments is provided to HMRC by employers and pension providers through Real Time Information. Details of state pension payments and other benefits are provided by other government departments. Most banks and building societies are required to report to HMRC details of the interest they pay to customers. HMRC will use this information and calculate the amount of tax that you owe.

Individuals receiving income from rent, dividends or self -employment income is not automatically received by HMRC. And therefore, these sources will not be eligible for Simple Assessment.

Under Self-Assessment taxpayers have ten months after the end of the tax year to gather their information and submit their Tax Return but, the 60day appeal window under simple assessment is considerably shorter, which may result in people being penalised if they do not respond within 60 days.

Taxpayers will just need to check that the information is correct, and if it is, they can pay their bill online or by cheque by the deadline in the letter. Recipients can either log into their Personal Tax Account (PTA) to pay online, or they can send a cheque.

If you are logging for the first time all you need is you NI number and a recent pay slip, p60 or passport.

The concept of Simple Assessment will definitely give peace of mind to millions of people across UK and it is also one step in creating a paperless society!

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