1.8m people to receive shock ‘simple assessment’ HMRC tax bill - here’s why and what to check next

1.8m people to receive shock ‘simple assessment’ HMRC tax bill - here’s why and what to check next Tax bills can be generated by earning more interest on your savings, from dividend payments or a range of other places - Bookmark - CommentsGo to comments HMRC is urging anyone who receives a “simple assessment” letter in the coming weeks and months to check the details carefully and make sure any tax owed is paid by the deadline. The letters, known officially as PA302, are sent to people who have tax to pay on income that has not already been collected through PAYE or self-assessment. The tax office says it plans to send about 1.8 million simple assessment letters this year. Here’s what to do if you get one, and what it means you might owe tax on. What is simple assessment? Simple assessment is a way for HMRC to collect tax it cannot take automatically through a taxpayer’s tax code or a self-assessment tax return. HMRC receives information from employers, the Department for Work and Pensions (DWP) and financial institutions, and then uses this information to calculate whether tax is due. Simple assessment allows HMRC to collect tax from people with relatively straightforward tax affairs without requiring them to complete a self-assessment tax return. So instead of you telling HMRC what you earned, HMRC tells you what it thinks you owe and gives you the chance to check it. Why have I received a simple assessment letter? If you’ve never received one before, a letter from HMRC asking for money can be alarming – particularly if you don’t usually complete a tax return and thought your tax was already being dealt with through your payslip or pension. The good news is that a simple assessment isn’t a penalty or an investigation, and it doesn’t necessarily mean anything has gone wrong. Get a free fractional share worth up to £100. Capital at risk. Terms and conditions apply. ADVERTISEMENT Get a free fractional share worth up to £100. Capital at risk. Terms and conditions apply. ADVERTISEMENT You might receive a letter if, for example, you have earned interest on savings or received dividends that have resulted in a tax bill. You may also receive one if you have a second income that has not been taxed or owe tax on pension income. HMRC can also use simple assessment where the tax cannot be collected through your tax code, for example where a larger amount – typically £3,000 or more – is owed. When will the letters arrive? The simple assessment letters are being sent out in stages, so when you receive yours will depend on your circumstances. Working age customers began receiving letters from 30 June, while pensioners started receiving them from 12 August. There will also be a second tranche of letters between October and December, relating to bank and building society interest data. The letters can arrive by post or appear in your Personal Tax Account online. The letter should explain how much tax you owe and why. How do I check whether my tax bill is correct? The information supplied by banks and other organisations may not always be correct, so don't simply assume the figures are right. Look at your bank statements, P60s, pension paperwork and other relevant income records to make sure the figures used by HMRC are accurate. If you disagree with the calculation or spot an error, contact HMRC within 60 days. When do I have to pay? For most people receiving a simple assessment letter for the 2025/26 tax year, the deadline for payment is 31 January 2027, unless a different date is stated on the letter. HMRC says you can pay in full or in instalments before the deadline. Payment can be made through the free HMRC app, online via Gov.UK, by bank transfer or by cheque. Myrtle Lloyd, HMRC chief customer officer, says: “If you receive a simple assessment letter and have tax to pay, please don’t ignore it. It is quick and easy to pay any tax owed via the HMRC app. “If you need extra support, or want to find out more, search ‘simple assessment’ on Gov.UK.” If you cannot afford to pay the bill in one go, contact HMRC to discuss your circumstances rather than allowing the debt to build up. Why are more savers being caught by tax? Savings interest is one reason more people are receiving tax bills from HMRC, as higher interest rates push earnings above the personal savings allowance (PSA). CACI data analysed by Yorkshire Building Society shows the number of non-ISA savings accounts forecast to earn more than £1,000 in annual interest has risen 1,047 per cent since 2018, from 462,000 to 5.3m. The PSA lets basic rate taxpayers earn £1,000 in interest tax-free, falling to £500 for higher-rate taxpayers. Additional-rate taxpayers do not have a PSA. Tina Hughes, director of savings at Yorkshire Building Society, says: “The scale of this shift is staggering. Our analysis shows that the number of savings accounts potentially exposed to tax has gone from under half a million to well over five million in just a few years. This isn’t about people suddenly becoming wealthy – it’s about a frozen allowance colliding with much higher interest rates.” As a result, savers can breach the allowance with much smaller balances than previously. At 4 per cent, a basic-rate taxpayer needs around £25,000 to earn £1,000 in interest. For those paying higher-rate tax, that amount would fall to only £12,500. To avoid paying more tax than necessary, make sure you keep track of interest across all of your accounts. If you are nearing your PSA, moving some savings into a tax-free ISA could help reduce your tax bill. When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results. Join our commenting forum Join thought-provoking conversations, follow other Independent readers and see their replies Comments