We are sharing this update from ACCA, our professional body, for the interest of clients and contacts. The content is (c) ACCA
What you need to know about a letter from HMRC to individuals with taxable income
HMRC has shared the following update with ACCA, which we highlight to practitioners as this may increase contact from former or new clients previously taken off self-assessment. Whilst HMRC may be discouraging contact as a result of these letters being issued, it is likely to cause increased communication with them so even though practitioners may not feel the service could get any worse, it may do.
Practitioners may wish to highlight the resources listed below to members of the public that they are unable to service and in particular point out that recipients of such letters should carefully check the income details as they may not always be correct. It would also be useful to highlight that in many cases individuals may be able to claim for certain expenses; higher rate taxpayers should not forget that any charitable donations they have made will provide some tax relief.
Message from HMRC
Over the next six weeks, we’re writing to around 560,000 customers who have taxable income but who are not in self assessment, or for whom we can’t automatically deduct the tax owed via a PAYE tax code.
The letter will include a detailed calculation of any tax due for income they received between April 2023 and April 2024. They’ll need to pay what they owe using simple assessment.
For some, including around 140,000 pensioners who will receive a letter, this will be the first time they’ve received a simple assessment.
How you can help
We’d like your help to explain to customers why they’ve received our letter and what, if anything, they need to do.
We’ve added some information below and, specifically for pensioners, an online guide to help you with this.
About the letter we’re sending to customers
It will explain:
- what they need to do
- how much tax they owe
- how to pay it
- when they need to pay it (usually by the following 31 January)
- they can pay in smaller amounts, as long as they pay the total amount by the due date
- what they can do if they don’t agree with our calculation.
They don’t need to do anything before receiving the letter.
If they don’t receive a letter, this means they probably don’t have any tax to pay – and they don’t need to contact us.
How we receive income information
We receive information about a customer’s taxable income including state pensions, savings and dividends – from the Department for Work and Pensions, banks and building societies.
If a customer’s taxable income is more than their Personal Allowance (£12,570 for most people), they may owe tax. Many customers report their income to us using the self assessment process or we automatically deduct the tax owed using their PAYE tax code. If a customer isn’t in self assessment and we can’t collect tax via PAYE, we issue a simple assessment.
A customer may have a lower personal allowance if they’ve transferred part of their taxable allowance – such as marriage allowance – to their partner.
More information on how to check a simple assessment is available on GOV.UK.
Our online simple assessment guide for pensioners is available on GOV.UK. The guide can be used to communicate with pensioners about simple assessment.
ACCA comment
ACCA has expressed members’ concerns to HMRC. Glenn Collins, head of technical and strategic engagement UK, said:
‘ACCA welcomes the efforts HMRC is making to ensure that those owing a small amount of tax are not dragged into complicated and unnecessary full blown self-assessment.
However, this latest initiative around Simple Assessment looks like another sticking plaster and won’t do anything to resolve the deep and underlying problems facing the tax authorities in the UK.
We are concerned of the impact on businesses – including tax agents – of increased communication from this group with HMRC. It will further impact the already poor service.
As ACCA has been saying repeatedly over years now HMRC needs proper funding and resource to ensure they can deal with taxpayers – individuals and businesses in an efficient and effective manner. We know the effect poor HMRC service has on growth, investment and productivity.
We look forward to working with the new government to ensure these vital improvements are made quickly.’