A large number of pensioners have recently been confronted with an unexpected tax bill.
This change has arisen because HM Revenue & Customs (HMRC) has sent out letters to over 140,000 pensioners who have taxable income but haven’t been submitting Self-Assessment tax returns.
In total, around 560,000 pensioners are being contacted for the 2023/24 tax year.
Understanding the reason behind the tax bills
The issue stems from the basic rate tax threshold remaining frozen at £12,570 for the past three years, combined with state pensions increasing in line with inflation.
Consequently, many pensioners now find their income exceeds this threshold, which has created new tax obligations.
Simple Assessment
For those unfamiliar, this may be your first interaction with HMRC’s ‘Simple Assessment’ system.
This method is used by HMRC to calculate and collect tax from individuals not usually required to file a Self-Assessment return.
The Simple Assessment tax statement, or form PA302, which you received, outlines the tax due on income from April 2023 to April 2024.
Managing your new tax bill
Receiving a tax bill unexpectedly can be unsettling. Take a moment to calmly read through the letter to understand your specific situation.
Check that all income sources, including state pensions and any additional earnings, are correctly reported.
Also, verify any potential deductions such as charitable contributions or pension contributions.
If you’re unsure about using online tools to handle this, don’t hesitate to ask someone you trust for assistance or contact our office for professional guidance.
Make sure you follow the provided instructions to pay your tax bill either online or through the HMRC app by the specified deadline to avoid penalties.
Although there’s no direct phone support, HMRC offers online guides on Simple Assessment.
Familiarising yourself with these can provide a clearer understanding of the process.
Seeking further assistance
Managing a tax bill can be straightforward with the right information and support.
However, the process can sometimes be complex, and crucial details might be missed.
Consulting with a professional can demystify the nuances of your tax situation and help ensure everything is handled correctly.
If you need assistance or have any questions about your tax bill, please reach out to us.
