A Simple Assessment is a tax calculation sent by HMRC. It applies to those who owe tax that cannot be collected automatically through the PAYE (Pay As You Earn) system. Instead of requiring you to submit a full Self Assessment tax return, HMRC calculates the tax you owe and sends you a letter or notification through your Personal Tax Account.
Who Receives a Simple Assessment?
Not everyone is eligible for a Simple Assessment. HMRC typically sends these notifications to people in specific conditions:
1. State Pension Recipients
If your State Pension exceeds your tax-free Personal Allowance, it ensures you pay the correct tax. Since PAYE cannot deduct tax from State Pensions, HMRC calculates your bill directly.
2. Those with Untaxed Income
If you earn additional income not taxed at source (rental income, savings interest or dividends) and owe £3,000 or more, you may receive one.
3. Those with Significant Liabilities
HMRC may issue a Simple Assessment to anyone owing £3,000 or more in unpaid tax, instead of requiring them to file a Self Assessment tax return.
4. New Pensioners
Those who recently started receiving their State Pension often encounter these assessments, especially if this income exceeds their tax-free allowance.
What Information is in a Simple Assessment?
The letter from HMRC contains all the details you need to understand your tax bill. It includes
- Your taxable income; such as income from pensions, wages or State Benefits.
- Any Income Tax already paid during the year.
- The remaining tax you owe.
You should always verify these figures against your own records.
Simple Assessment vs Self Assessment
Simple Assessments (as the name implies) are much easier than Self Assessments, for those with straightforward tax affairs.
| Feature | Simple Assessment | Self Assessment |
|---|---|---|
| Filing Requirements | No tax return required | Taxpayer must file a return |
| Income Types Covered | Limited to straightforward income (wages, pensions) | Covers all income (self-employment, foreign income) |
| Tax Calculation | HMRC calculates tax owed | Taxpayer calculates tax owed |
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