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New Simple Assessments For Some Tax Payers

HMRC have a new power, that is to raise Simple Assessments from 2016/17. Currently there is no detailed guidance available on the revenue’s website following its announcement however we expect some guidance in the next two weeks.

This new assessment will be relevant where the taxpayer’s main source of income is taxed under PAYE (for example if you are employed) but that person also has up to £10,000 of other taxable income or gains.

The aim of a Simple Assessment is to take such taxpayers out of the Self Assessment system as they only have a small amount of income or gains not taxed under PAYE. Whilst only a few taxpayers will receive a simple assessment for 2016/17 you can expect more qualifying tax payers to be sent one from 2017/18.

Not a tax return

A simple assessment is the opposite of a self assessment made in a tax return as it is a tax assessment made by HMRC, not the taxpayer. HMRC has up to four years from the end of the tax year to issue a simple assessment.

If you receive a simple assessment you have 60 days to query the simple assessment or a longer period as HMRC allows. It is important to query it if you think it is wrong as once it becomes binding you will be liable for the tax liability with little scope to appeal. It is not something that can be replaced by filing a tax return.

Although not a tax return, the normal payment tax date is applicable, that is the 31st January 2018 for the 2016/17 tax year in most cases.

It is worth nothing that simple assessments do not fall under MTD (Making Tax Digital) and is a separate requirement to those which will be required by MTD in the future.