Many UK taxpayers will receive a letter from HMRC in the next few months, taxpayers have been warned. These letters are known as Simple Assessment Letters or Tax Calculation Letters and are usually sent out between June and March.
Simple assessment is a method of collecting tax that HMRC thinks you owe. This is an alternative to self assessment, where you need to fill in a tax return if HMRC cannot collect the tax directly from you by adjusting your PAYE tax code.
People who don’t have a PAYE source of income, such as a private pension, or people who owe too much tax for it to be collected via PAYE usually must fill out a self assessment.
Some taxpayers, notably pensioners, are starting to have a tax liability for the first time in years because frozen tax allowances have not kept up with rising state pension and bank interest rates, reports Birmingham Live.
Simple Assessment Letters or Tax Calculation Letters clarify whether you are due a refund or need to pay more tax from the previous tax year, in this case, 2023/2024, and outline your next steps.
The Low Incomes Tax Reform Group has issued guidance over what to do if you receive the documentation.
It explains: “If you receive a simple assessment letter from HMRC, you should check the figures carefully. The second page of the letter contains a full tax calculation, which sets out the different sources of taxable income which HMRC believes you had in the tax year.
“Make sure that the calculation includes all your sources of taxable income in the year, as well as any deductions or reliefs you may be entitled to.”
Your simple assessment letter should also include a brief explanation of how the amount owed has arisen.
The government website provides more information on how to properly read your simple assessment tax bill. If you do not agree with their calculation, you should contact HMRC to explain why within 60 days of the date of the letter.
If you do not contact HMRC within 60 days, then you lose the right to query the calculation.