HM Revenue & Customs (HMRC) has issued letters to over 140,000 pensioners who have taxable income but have not been submitting Self-Assessment tax returns.
In total, around 560,000 pensioners are being contacted for the 2023/24 tax year.
What are the reasons behind the tax bills?
The root of this issue lies in the basic rate tax threshold, which has remained frozen at £12,570 for the past three years.
At the same time, state pensions have increased in line with inflation.
As a result, many pensioners now find their income exceeding this threshold, triggering new tax liabilities.
Introduction to Simple Assessment
For those unfamiliar, this may be your first experience with HMRC’s ‘Simple Assessment’ system. Simple Assessment is a method used by HMRC to calculate and collect tax from individuals who do not normally need to file a Self-Assessment tax return.
The form you received, known as the Simple Assessment tax statement or form PA302, details the tax owed on your income from April 2023 to April 2024.
Managing your new tax bill
Receiving an unexpected tax bill can be unsettling, but approaching the situation calmly will give you the headspace to make better decisions.
Start by carefully reading through the letter to understand your specific circumstances.
Ensure that all income sources, including your state pension and any additional earnings, are accurately reported.
It is also wise to verify any potential deductions, such as charitable donations or pension contributions, that might reduce your tax liability.
If you are unsure about using HMRC’s online tools to manage your tax obligations, consider asking someone you trust for assistance or contact our office for professional support.
Remember to follow the instructions exactly as provided by HMRC to pay your tax bill online or through the HMRC app by the specified deadline to avoid penalties.
Although direct phone support may not be available, HMRC provides online guides on the Simple Assessment process.
Taking the time to familiarise yourself with these resources can help you handle the situation more confidently.
Whether you have questions about your tax bill or need assistance in managing it, our team is ready to help.