More than half a million taxpayers due to receive simple tax assessments from HMRC for the first time have been warned not to ignore them to avoid penalties and miss out on tax deductions, according to leading audit, tax and business advisory firm Blick Rothenberg.
Robert Salter, a director at the firm, said: “HMRC recently announced that 560,000 individuals – including 140,000 pensioners – will receive simple tax assessments for the 2023/24 tax year in the coming weeks. Unfortunately, many taxpayers tend to automatically ignore the correspondence from HMRC or assume that ‘tax will take care of itself’ through PAYE or some other form of tax withholding.
“However, these simple assessments effectively act as tax claims, requiring individuals to proactively pay tax to HMRC. Failure to do so could result in penalties and interest on unpaid tax for not settling the tax position in a timely manner,” he explained.
Robert also stressed: “It is important that taxpayers receiving these simple tax assessments check the calculations made by HMRC and the income included in their assessments. Experience shows that HMRC may not necessarily take into account tax deductions available, such as charitable contributions, pension contributions or professional contributions.”
He added: “If taxpayers pay the tax required under the simple assessment without considering potential deductions, they risk overpaying tax to HMRC. Spending five or 10 minutes reviewing the revenue figures can prevent this from happening.”
Robert also pointed out: “HMRC has always issued a small number of simple assessments each year to capture tax due on income such as investment income, dividends and state pensions – essentially income that is not directly subject to PAYE deductions or collected through a self-assessment tax return.”
“The number of such cases has increased for 2023/24 due to frozen tax brackets, such as the £12,570 personal tax allowance, which has been frozen since April 2021. In addition, high interest rates mean that more individuals with modest savings may now be liable for tax on this income. This increases the risk of tax penalties for those who ignore HMRC, but those who are proactive can benefit from tax deductions – a reminder that ‘a stitch in time saves nine’.”