Simple Assessment – the end of Self Assessment (for some)

Simple assessment is a new way of reporting your income to HMRC and making payment – for some.

For most of the 11 million of us who fill in Self Assessment forms, nothing’s going to change. But, starting in October 2017, Simple Assessment is being introduced initially to these two groups of tax payers:

  • those claiming a state pension for the first time but whose 2016/2017 income will exceed the personal allowance limit that year (£11,500), and
  • people currently contributing to the system by PAYE who have underpaid their tax but who can’t have the amount outstanding to HMRC collected through their tax code.

No further word on other groups that will be included in Simple Assessment just yet however HMRC used the phrase “rolling out” so it’s not unreasonable to expect further announcements soon.

 

Simple assessment – existing state pensioners earning over the personal tax allowance

Anyone in this category who has received their Self Assessment form for 2016/2017 should complete and return their form as normal, making payment no later than midnight on January 31st 2018.

These pensioners will start to receive the Simple Assessment form for the tax year 2017/2018 onwards.

 

Simple assessment – how is the new system going to work?

HMRC believe that they will be able to accurately deliver this new streamlined system through a more intelligent use of the information they already hold on file on their databases.

Their computer systems will now part-fill-in the Simple Assessment forms prior to the arrival of their sending out the Simple Assessment forms to taxpayers.

From September 2017, they will write to Simple Assessment taxpayers with a tax calculation. The tax calculation will display the following –

  • their income from pay (that is, PAYE salary),
  • pensions,
  • state benefits (both tax-free and taxable benefits),
  • interest earned on savings, and
  • employee benefits (for example company cars, living accommodation, medical insurance, and so on)

When taxpayers receive the letter, they need to check that the information is accurate. If they believe it is, they can pay their bill online or by cheque as long as it reaches HMRC by the deadline set out in the letter.

 

Simple assessment – mistakes

HMRC are promising to move “customers with more complex tax affairs who continue doing Self Assessment will benefit from a modernised process in the future … (and) … (we) will complete the rest of the information automatically”. That means that the Self Assessment customers will only be asked for the missing information needed to assess their tax, benefits, and credits.

Great intention but, given the problems with the launch of Making Tax Digital in the last few years, we would advise customers under this regime to keep an eye out for mistakes. Better still, we’ll check it for mistakes for you and get in touch with HMRC if there are any.

For Simple Assessment customers, if something’s wrong, you have a shockingly short 60 days to contact HMRC to let them know about it. The types of situation where this could occur, according to the taxman’s site, are when the amounts on the form are wrong or you’ve given HMRC information but they’ve not included it on your form.

 

Simple assessment – penalties

At the time of writing (11th October, 2017), there are no publicised penalties for missing deadlines with Simple Assessment, unlike the well-known fees and fines associated with Self Assessment.

On their policy paper, HMRC state that should someone miss their deadline, “they should contact HMRC to discuss their circumstances or financial penalties will be applied in line with current policy.”

If you’re unhappy with the way you’re treated, you have an even shorter 30 days to tell HMRC. Hopefully, that won’t be you but if it is, here’s where you start the process.

 

Simple assessment – get our help

The way we report tax and pay it is undergoing a revolution and Simple Assessment is one of the many changes happening to the system.

Please call Smart Team on 01202 577500 or email us at [email protected].

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Confirmation statements - the new annual returns