The new simple assessment system is designed to end the traditional tax return process. Taxpayers who usually provide information under the self-assessment will no longer need to do so. This is because the returns will now be pre-populated with existing data that HMRC holds.
This option will apply to two groups starting from September 2017:
- The new state pensioners with income more than the personal tax allowance in the tax year 2016/17
- PAYE taxpayers who have underpaid tax and who cannot have the tax collected through their tax code
The new system gives option to both groups to let HMRC use the data they already have and calculate the amount of tax owed rather than filling the form themselves.
For taxpayers who have more complex tax affairs and are still doing the self-assessment, they will only be asked for information needed to assess their tax, benefits and credits. HMRC will automatically complete the rest of the information.
HMRC will start writing to taxpayers this month in the form of P800 or a simple assessment letter indicating their tax calculation. The letter will also include the taxpayers’ income from pay, pensions, state benefits, saving interest, and employee benefits.
Once received, taxpayers should check whether the information is correct. If it is, they can pay online or by cheque before the set deadline in the letter. If any information is incorrect, taxpayers have 60 days to contact HMRC and 30 days to appeal against the decision.