Background
Simple Assessment is a way for HM Revenue & Customs (HMRC) to collect underpayments of tax from taxpayers with relatively straightforward tax affairs. By HMRC issuing a Simple Assessment to a taxpayer it means they are not required to complete a Self Assessment tax return. The types of income that are commonly dealt with under Simple Assessment include the state pension and bank and building society interest. The Simple Assessment letter (PA302) includes a calculation of the tax due based on the information held by HMRC, however, they can contain errors as HMRC may not have an individual’s full information and it is important that taxpayers receiving a Simple Assessment check them carefully.
The number of Simple Assessments issued by HMRC has increased significantly since they were introduced in 2017, and HMRC has recently confirmed it is in the process of issuing new Simple Assessment letters to individuals with tax to pay on interest received in the 2024/25 tax year. Simple Assessment letters are sent by post or to the taxpayer’s personal tax account if they have one.
Detail
A Simple Assessment letter may be issued by HMRC if a taxpayer:
- owes Income Tax that cannot be automatically taken out of their income
- owes HMRC £3,000 or more
- needs to pay tax on their State Pension.
Simple Assessment represents a good alternative to self assessment for some taxpayers but there are issues with the current system and so taxpayers receiving a Simple Assessment should ensure they check it thoroughly. If you receive a Simple Assessment and think any information in the letter is wrong, have any queries or think it should be withdrawn then you must contact HMRC within 60 days.
Letters may contain errors
It is important that figures in the Simple Assessment letter are checked to ensure that they match with a taxpayer’s records, for example their bank statements and correspondence from the Department for Work and Pensions. Some figures may be estimated based on historic amounts, for example donations made under gift aid, employer benefits and pension contributions. Therefore it is important to check that the figures used by HMRC reflect the actual amounts for that tax year.
Calculating income tax can be complicated, particularly where the calculation involves bank and building society interest. Depending on the circumstances, it is possible that no income tax may be payable on interest where it is within the personal allowance or the personal savings allowance, or where the starting rate for savings applies. This can mean checking simple assessment letters is not necessarily straight forward. To help with this, HMRC has published guidance explaining how interest is taxed and an online tool for checking a simple assessment tax calculation.
Multiple letters received
A taxpayer may receive more than one Simple Assessment letter for a tax year. For example, a taxpayer who has already received a letter for the 2024/25 tax year that did not include their bank and building society interest may now receive a second letter taking that information into account.
This can create confusion, particularly as the second letter will show the total tax payable for 2024/25, including the tax due from the first letter even if this amount has been paid. Any tax paid following receipt of the first letter should be deducted from the tax shown as due in the second letter before making a further payment.
Letters sent in error
There are instances of HMRC sending Simple Assessments to taxpayers who are already in self assessment. In these circumstances, the taxpayer, or their agent, should contact HMRC and request that the Simple Assessment be withdrawn. There have otherwise been instances of HMRC chasing a Simple Assessment payment even after the self assessment return has been submitted and the self assessment tax paid.
Paying a Simple Assessment liability
The due date for paying a Simple Assessment tax bill for the 2024/25 tax year depends on the date of the letter. If the letter was issued before 31 October 2025, the due date is 31 January 2026. If it was issued after that date, the taxpayer has three months from the date of the letter to pay the tax due. HMRC has published guidance on how to pay a simple assessment tax bill.
Where a taxpayer believes they will be unable to pay their tax bill in full by the due date, they may wish to consider contacting HMRC to agree a time to pay arrangement. Since August 2025, an online application can be made in respect of a Simple Assessment tax liability.
If you receive a Simple Assessment from HMRC and have any questions or would like the calculation to be checked, then please contact our Tax Director, Jenny Marks.
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