A letter has arrived from HMRC with a tax calculation you never asked for. There’s no return to file, no online form to complete, just a number and a payment date. You could be forgiven for thinking this is a scam. Actually, it’s completely legitimate, and it’s called a Simple Assessment tax calculation. It catches out plenty of creative professionals who assumed all HMRC tax bills came through Self-Assessment. Here’s what it means, why you’ve received one, and what to do next.
What is a Simple Assessment tax calculation?
Simple Assessment is HMRC’s way of telling you what Income Tax you owe without asking you to file a return. Rather than you self-reporting income, HMRC uses information it already holds from employers, pension providers, banks and the Department for Work and Pensions to work out any tax underpayment. The result arrives as a letter called a PA302. Introduced in September 2017, Simple Assessment takes straightforward cases out of Self-Assessment altogether, so if you’ve received one, HMRC has decided your situation doesn’t need a full tax return or you have underpaid tax such as untaxed interest income.
Simple Assessment is not Self-Assessment
The names are easy to confuse, but the two systems work very differently. With Self-Assessment, you calculate and report your own income and expenses each year, typically because you run a creative business or have complex income streams. With a Simple Assessment Tax Calculation, HMRC does the calculating and tells you the result. If you’ve already completed an annual Self-Assessment tax return, a Simple Assessment letter isn’t a substitute for it. It may apply where your tax affairs are otherwise straightforward, but one underpayment can’t be collected any other way.
Why HMRC send a Simple Assessment letter
HMRC issues a Simple Assessment letter when an underpayment can’t be collected automatically through your tax code. This typically happens if you’ve received State Pension income above your Personal Allowance of £12,570, earned savings interest that pushed you over your tax-free allowances, underpaid tax through PAYE, or owe £3,000 or more from a previous tax year. For creative professionals combining PAYE work, such as an acting or production contract, with freelance income or royalties, these triggers can appear even in an otherwise simple tax position.
What your PA302 letter tells you
Your PA302 sets out your taxable income for the year, broken down by source such as pay, pensions, state benefits or savings interest, alongside the tax you’ve already paid and the balance owed. It’s sent by post, or made available in your Personal Tax Account if you’ve opted for paperless communication. Read it alongside your own records, including P60s and bank interest statements, so you can see exactly how HMRC arrived at the figure. Don’t assume it’s correct simply because it comes from HMRC; errors in third-party data do happen.
Checking your Simple Assessment Tax Calculation figures are correct
Before paying anything, compare each figure against your own paperwork. Check your State Pension amount matches DWP records, that savings interest aligns with your bank statements, and that PAYE income and tax paid match your P60. A common error involves state benefits paid every four weeks rather than monthly; HMRC expects you to multiply the regular payment by 13, not 12, to reach the annual total. If anything doesn’t add up, gather the correct figures before contacting HMRC. More information on checking your Simple Assessment is available from GOV.UK
Paying your Simple Assessment tax bill
The deadline on your letter takes priority, but as a general rule, tax owed is due by 31 January following the tax year, or three months from the date of the letter if that falls later. You can pay in full or in instalments, provided the full balance clears by the deadline. You’ll need the 14-character payment reference beginning with ‘X’ shown on your letter and using the wrong reference can delay allocation of your payment. If you can’t pay in full, HMRC’s Time to Pay service lets you spread bills of up to £30,000 online.
What to do if you disagree with the calculation
If you believe HMRC has used the wrong figures on the Simple Assessment tax calculation, you have 60 days from the date on the letter to raise a query, by phone or in writing, setting out which amounts are wrong and what they should be. HMRC will review the assessment and issue a revised PA302 or a decision letter explaining why your figures stand. If you still disagree, you have a further 30 days to lodge a formal appeal. You must still pay by the original deadline while a query or appeal is ongoing, unless HMRC confirms otherwise in writing.
When creative professionals still need Self-Assessment
Simple Assessment only applies to straightforward tax positions, so it doesn’t replace Self-Assessment for anyone who is self-employed, a company director, or earning significant untaxed business income. If you’re a freelance photographer, musician or writer with multiple income streams, our accountants for creatives team usually keep you within Self-Assessment even if you also receive a Simple Assessment letter for something unrelated, such as savings interest. Getting this distinction right matters, because assuming a Simple Assessment tax calculation covers everything can lead to penalties for undisclosed business income.
Simple Assessment checklist: what to do when your letter arrives
- Check the date on your Simple Assessment tax calculation and note the payment deadline
- Cross-check every figure against your own P60s, bank statements and DWP letters
- Contact HMRC within 60 days if anything looks wrong, stating the correct figures
- Set up a Time to Pay arrangement online if you can’t clear the balance in full
- Keep a copy of the letter and any correspondence for your records
- Confirm with your accountant whether you also need to file a separate Self-Assessment return
FAQs
What is the purpose of a Simple Assessment Tax Calculation?
Simple Assessment lets HMRC collect underpaid tax from people with straightforward affairs without requiring a full tax return. It suits cases like State Pension income or savings interest, where HMRC already holds enough data to work out what’s owed.
Do I need to do anything if I receive a Simple Assessment letter?
You don’t need to file a return, but you do need to check the figures are correct and pay the amount owed by the deadline shown on the letter.
Can I get a Simple Assessment if I’m self-employed?
Simple Assessment is generally for those outside Self-Assessment, so most self-employed creatives will continue filing an annual tax return instead. You could still receive one for an unrelated matter, such as State Pension income or savings interest, alongside your usual Self-Assessment obligations.
Is a Simple Assessment the same as Self-Assessment?
No, they are different systems. Self-Assessment requires you to report your own income and expenses each year, while a Simple Assessment Tax calculation is produced for you by HMRC from data it already holds.
What happens if I miss the payment deadline?
HMRC will charge interest on the outstanding amount from the day after the deadline, and continued non-payment can lead to further recovery action. Contact HMRC before the deadline if you can’t pay in full, as a Time to Pay arrangement can prevent this.
How do I appeal a Simple Assessment?
You first raise a query within 60 days of the letter, then if you disagree with HMRC’s response, you have a further 30 days to lodge a formal appeal in writing. State clearly which figures you dispute and what they should be.
About the author
Robert Green is a chartered accountant and co-founder of Green & Peter, specialist accountants for creative businesses and property investors in Whetstone, North London. We help clients make sense of HMRC correspondence, from Simple Assessment letters to full Self Assessment returns, so nothing gets missed. To discuss a Simple Assessment tax calculation you’ve received, call 020 8446 8100 or visit greenandpeter.co.uk/contact-us/
