A Simple Assessment letter landing on your doormat can feel like an unwelcome surprise.
The form, officially known as a PA302, states that HMRC believes you owe income tax from a previous tax year—sometimes hundreds or even thousands of pounds.
Before you panic or reach for your credit card, it helps to understand exactly why this happens and whether the calculation is actually correct.
Every year, HMRC issues millions of these letters to UK taxpayers. While the system aims to simplify tax collection, it often catches people completely off guard.
This guide explains the mechanics behind Simple Assessment, the common errors that trigger incorrect demands, and the verification steps that could save you money.
Key Takeaways
A Simple Assessment is HMRC’s calculation of tax you owe, based on data from employers and pension providers.
You have 60 days from the letter date to challenge figures you believe are wrong.
Common causes include State Pension taxation, multiple income sources, and tax code errors. Always verify the income figures against your P60s before paying.
Payment plans are available if you cannot afford the full amount immediately.
How Simple Assessment Calculations Work
Unlike Self Assessment tax returns (which you complete yourself), a Simple Assessment is calculated entirely by HMRC using information they receive from third parties.
Employers submit your earnings through Real Time Information (RTI). Pension providers report payments made. Banks report interest earned above certain thresholds.
The Department for Work and Pensions reports State Pension and benefits.
HMRC’s computers process this data, apply the relevant tax bands and allowances, compare it against tax already deducted, and generate a PA302 if they believe there is a shortfall.
The system is largely automated, which means it operates quickly but also means errors in source data flow straight through to your letter.
This differs significantly from a P800 tax calculation. A P800 can show either an underpayment or an overpayment and typically allows HMRC to adjust your tax code to collect small amounts.
A Simple Assessment is specifically for collecting tax that cannot be recovered through PAYE—usually because the amount exceeds £3,000 or because you have no current PAYE income to adjust.
Why State Pension Creates Tax Complications
The State Pension is one of the most common triggers for Simple Assessment letters, yet many retirees do not realise their State Pension is taxable income.
No tax is deducted at source when the State Pension is paid—it arrives in your bank account gross.
For the 2025/26 tax year, the full new State Pension is approximately £11,500 per year.
This alone does not exceed the Personal Allowance of £12,570, so someone with only State Pension income would typically owe no tax.
However, most retirees have additional income: a private pension, a part-time job, rental income, or savings interest.
When you have multiple income sources, HMRC should adjust your tax code on other income to account for the untaxed State Pension. In practice, this adjustment sometimes fails.
The private pension provider might not receive the correct tax code, or the code might arrive late, or it might be applied incorrectly.
The result is an underpayment that accumulates over the tax year and eventually triggers a Simple Assessment.
Consider a retired teacher receiving £11,500 State Pension plus £14,000 from a Teachers’ Pension.
Their total income of £25,500 exceeds the Personal Allowance by £12,930, creating a basic rate tax liability of approximately £2,586.
If the Teachers’ Pension provider only deducted tax as if that £14,000 were the sole income (using a standard 1257L code), they would have collected around £286 in tax—leaving over £2,300 unpaid.
Multiple Jobs and the Tax Code Communication Problem
Working two or more jobs simultaneously creates particular challenges for the PAYE system.
Each employer operates independently, applying whatever tax code HMRC has issued for that employment. Problems arise when these codes do not properly account for total earnings.
Your Personal Allowance can only be applied once.
HMRC typically allocates the full allowance to your main job (using code 1257L) and instructs secondary employers to use a BR code, which deducts basic rate tax from every pound.
This system relies on accurate information flowing between HMRC and multiple employers, and gaps frequently occur.
Common scenarios that lead to underpayment include:
- both jobs using a 1257L code (applying the Personal Allowance twice), a secondary job starting before HMRC issues the correct code
- cumulative versus week 1/month 1 code issues carrying forward,
- and earnings from one job pushing total income into a higher tax band that the other employer cannot see.
These situations do not mean you have done anything wrong.
The PAYE system simply struggles with complexity, and Simple Assessment becomes HMRC’s mechanism for catching up.
Savings Interest and the Personal Savings Allowance
Since April 2016, banks and building societies no longer deduct tax from savings interest. Instead,
HMRC uses a Personal Savings Allowance system.
Basic rate taxpayers can earn up to £1,000 in savings interest tax-free.
Higher rate taxpayers receive a £500 allowance. Additional rate taxpayers receive no allowance.
Banks report interest earned to HMRC, who then calculate whether you have exceeded your allowance.
If you have, and the tax cannot be collected by adjusting your code, a Simple Assessment may follow.
This can catch people out when interest rates rise (as they did significantly in 2023-24) when:
- they receive a lump sum like an inheritance and temporarily hold large cash balances
- when Premium Bond prizes push them over the threshold
- or when they are borderline higher rate taxpayers and savings interest tips them over.
Five Verification Steps Before Paying
HMRC explicitly advises checking Simple Assessment calculations before paying.
Their figures depend entirely on data reported by others, and mistakes happen more frequently than most people realise.
1.The first step involves comparing income figures. Obtain your P60 from each employer or pension provider for the relevant tax year.
The total pay and tax deducted figures should match what appears on your PA302. Discrepancies might indicate reporting errors.
2.Next, verify tax already paid. Your Simple Assessment shows how much tax HMRC believes was deducted.
If this figure is lower than your P60s show, you may have already paid more than HMRC realises.
3.Third, review your tax code history through your Personal Tax Account at gov.uk. Look for periods where emergency codes (ending W1 or M1) were applied, or where codes changed mid-year unexpectedly.
4.Fourth, check for missing allowances. Have you claimed Marriage Allowance? Professional subscription relief? Uniform expenses? These reduce your taxable income and might lower what you owe.
5.Finally, confirm the tax year. Simple Assessments sometimes relate to previous years. Ensure you are checking documents from the correct period.
When Calculations Go Wrong: Common HMRC Errors
While HMRC’s automated systems process millions of calculations accurately, certain error patterns recur.
Understanding these helps you identify potential problems with your own assessment.
Duplicate income reporting occurs when an employer submits RTI data twice, or when a pension provider reports payments that overlap with employment income incorrectly coded.
The result is HMRC believing you earned more than you actually did.
Timing mismatches happen when income is reported in the wrong tax year. A bonus paid in early April might be attributed to the previous tax year, or vice versa.
If you changed jobs around the tax year end, carefully check which earnings belong where.
Incorrect pension coding affects many retirees. Some pension providers are notoriously slow to apply tax code changes, meaning months of incorrect deductions accumulate before correction.
Failure to account for tax relief is another issue. If you have a P87 claim submitted for work expenses, this should reduce your taxable income.
Sometimes these claims are not reflected in Simple Assessment calculations.
The 60-Day Window: Challenging Incorrect Figures
From the date on your Simple Assessment letter, you have 60 days to raise an objection.
This deadline matters—after 60 days, the assessment becomes final and your options narrow considerably.
To dispute the calculation, contact HMRC explaining specifically which figures you believe are wrong and why.
Provide supporting evidence: copies of P60s, bank statements showing actual interest received, evidence of expenses claimed. Keep records of all communication.
HMRC must respond in writing with their decision.
If they maintain their position and you still disagree, you can request a formal review by a different HMRC officer, or appeal to the independent Tax Tribunal.
Most disputes resolve at the initial stage when correct evidence is provided.
Importantly, if HMRC agrees with your challenge and reduces the amount owed (or confirms you have overpaid), they will issue a revised calculation or arrange a refund.
Payment Options When Money Is Tight
If your Simple Assessment is correct but paying immediately would cause hardship, contact HMRC’s Payment Support Service promptly.
They can arrange a Time to Pay agreement, spreading the debt over several months—sometimes 12 months or longer, depending on your circumstances.
Interest still accrues on the outstanding balance, but you avoid late payment penalties as long as you stick to the agreed schedule.
The key is contacting HMRC before the payment deadline, not after.
What Happens If You Ignore It
Ignoring a Simple Assessment does not make it disappear. HMRC will add late payment interest from the original due date.
After 30 days, a 5% penalty may apply. Further penalties follow at 6 months and 12 months.
Eventually, HMRC can use enforcement powers including debt collection agencies, taking money directly from wages or bank accounts, or county court action.
The earlier you engage—whether to pay, challenge, or arrange a payment plan—the better the outcome.
Simple Assessment FAQs
Q1: What is a Simple Assessment from HMRC?
A: A Simple Assessment (form PA302) is HMRC’s calculation of income tax you owe from a previous tax year. Unlike Self Assessment, you do not file it yourself—HMRC calculates it using data from employers, pension providers, and banks, then sends you a letter stating the amount due.
Q2: Why have I received a Simple Assessment letter?
A: Common reasons include owing tax on State Pension income that was not collected through PAYE, having multiple jobs where tax codes did not account for total earnings correctly, earning savings interest above your Personal Savings Allowance, or owing more than £3,000 that cannot be collected through tax code adjustments.
Q3: How long do I have to pay a Simple Assessment?
A: If your letter is dated after 31 October, you typically have 3 months to pay. Otherwise, payment is usually due by 31 January following the end of the relevant tax year. Contact HMRC before the deadline if you cannot pay in full.
Q4: Can I challenge a Simple Assessment if I think it is wrong?
A: Yes, you have 60 days from the date on your letter to dispute the calculation. Contact HMRC explaining which figures you believe are incorrect and provide supporting evidence such as P60s or bank statements. After 60 days, the assessment becomes final.
Q5: What happens if I cannot afford to pay my Simple Assessment?
A: Contact HMRC’s Payment Support Service to discuss a Time to Pay arrangement. This allows you to spread payments over several months. Interest still applies, but you avoid late payment penalties if you maintain the agreed schedule.
