Do You Need To Pay A Simple Assessment Tax Bill This January?
Most of us have heard about the Self-Assessment tax regime, especially those who are self-employed or who need to declare income outside of their main PAYE job. But some people will have received Simple Assessment letters from HMRC, and they may need to pay a tax bill by January 31, 2025 too.
HMRC has been sending out letters to those it believes need to pay tax but who would not need to fill in a full self-assessment form. Those getting the letters will include people who owe £3,000 or more, who won’t be able to pay the tax they owe out of their PAYE income, or who must pay tax on their State Pension.
Challenging a letter
If you get one of these letters and you believe it has come to you in error, or that there is an error in the calculations you’ve been sent, you will need to get in touch with HMRC within 60 days to challenge it and explain why it is incorrect or doesn’t apply to you. The deadline for paying your final bill will depend on when you get your Simple Assessment letter.
For example, if your letter comes before October 31, 2024 – which covers the April 6, 2023, to April 5, 2024, tax year – then you need to pay what is owed by January 31, 2025.
If you get your letter after October 31, 2024, which again covers the 2023/24 tax year, or perhaps an earlier one if relevant – it should say the period it relates to on the letter – then you must pay what you owe within three months of the date on the letter.
What will be in the letter?
The Simple Assessment letter will outline what your taxable income is – which could be pay from an employer, from your pension, or State benefits – and it will also show any tax you have paid. The important figure is the tax it says you owe.
However, you shouldn’t take these figures at face value. Always check HMRC has its sums right, because it can often make mistakes which could result in you paying tax you didn’t need to pay. You can check your pay on your P60, look at your bank statements, or check the figures on any letters you have received from the Department for Work and Pensions if the tax bill relates to benefits or the State pension. Remember though, if you get State benefits paid once every four weeks, you need to multiply your regular payment by 13, not 12, to find out what the total paid to you in a year is.
You may also be able to use the HMRC tax checker to double check an estimate of how much tax you should have paid in the previous tax year. But if it still doesn’t make sense, then you can always ask HMRC for advice or a speak to your accountant.
What if I don’t agree, or can’t afford to pay the tax I owe?
If you think the figures in your Simple Assessment are wrong, or you think you shouldn’t have been sent one at all, then you must go back to HMRC within the 60 days and explain which figures are wrong and what you think they should be.
If HMRC agrees the Simple Assessment is incorrect, then you will have a new letter sent to you based on new figures and you will need to make the payment outlined in that letter within the relevant period. If HMRC doesn’t agree the figures are incorrect, then you will still have to pay the amount due before the deadline, unless you are told it will delay your payment until a later date.
However, if your deadline is approaching and you have not resolved the problem with HMRC, you will still need to pay the tax HMRC says is due. Then, if you still disagree with its decision, you have the right to appeal. You can find out how to do this in the decision letter, and any appeal must be made within 30 days of receiving the decision letter.
You can pay your bill online, by bank transfer, or by cheque if you prefer. If you can’t pay on time, then you should contact HMRC and explain your position. You may be asked to pay what you owe in instalments over time, but you can only do this once the deadline has passed. You need to have your National Insurance number and your UK bank account details when you contact HMRC about this.
You will be asked:
- if you can pay in full
- if there are other taxes you need to pay
- how much money you earn
- how much you usually spend each month
- what savings or investments you have
If you have savings or assets, HMRC will expect you to use these to reduce your debt as much as possible.
Source: Gov.uk
If you receive a Simple Assessment letter and don’t know whether the information in it is correct or not, then please get in touch with us and we will do whatever we can to help.
