29 Sep 2017 3:09 PM

HMRC has just released more details about their new simple assessment system which will herald the end of the self-assessment tax return process by providing taxpayers with returns pre-populated with data from other sources.

Simple assessment will be open to two groups (new state pensioners who have received income that exceeded their personal tax allowance in the tax year 2016 to 2017 and PAYE taxpayers who have underpaid their tax and cannot have that tax collected through their tax code) as early as this month, September 2017.  The next step will be to remove all state pensioners whose pension exceeds their personal allowance from self-assessment during the tax year 2018 to 2019.

Instead of asking these groups to pull together all of the information required to complete their return, HMRC use data it already has to calculate what tax is owed, a move they say will “streamline the process and reduce the administrative burden.”  Meanwhile taxpayers who wish to continue with self-assessment will only be asked for the basic information required to assess their tax, benefits and credits with HMRC filling in the rest for them.

This month HMRC will start the process of writing to taxpayers to confirm the changes. These letters will be accompanied by a tax calculation (a P800 or PA302 depending on the circumstances) based upon their income from pay, pension income, benefits, interest on savings and/or any employee benefits they may receive.  If the information is correct taxpayers will be expected to pay what they owe by the deadline stated in the letter.  If it is incorrect there will be a 60 day period in which they will need to contact HMRC and if they’re not happy with the response, a further 30 days to appeal against that response.

While this is clearly the next stage in HMRC’s promised plan to simplify the tax return system, what is interesting for us as personal tax specialists is it appears to take us back to exactly where we were around 20 years ago.

For the last two decades we have we have had the Self-Assessment system; we have to tell HMRC what our income is and, therefore, what we owe in tax and then we pay that amount.  That system was introduced to supersede the previous regime whereby HMRC would send you an assessment based on the information they either had (or could reasonably assume) and you either agreed and paid or appealed.  Although more details will obviously follow, our first reading is this new system appears to be remarkably similar to the last but one!

As this will directly affect the way you submit your tax return, you may have questions about how and when these changes will affect you.  If you do have any questions about the new system or about any other aspect of your personal tax affairs, please contact us today on +44(0)20 7240 9971 or david.gibbs@alliotts.com and we will be happy to help.

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