Making Tax Digital: Income Tax Simple Assessment

18 December 2015

Legislation will be introduced in Finance Bill 2016 to enable HMRC to send a Simple Assessment notice to customers with straightforward tax affairs which will set out their tax liability without the need for the person to submit a self-assessment return.

The measure, outlined in the Policy Paper - Income Tax: Simple Assessment, provides a new power to allow HMRC to make an assessment of Income Tax or CGT liability without the individual first being required to complete a Self Assessment tax return. It will allow HMRC to assess a person’s tax liability on the basis of information held by it, for example it will be used where it is not possible to collect the whole of a person’s annual Income Tax liability through PAYE and HMRC has sufficient information about the individual to make the assessment.

The measure is part of the government’s commitment to abolish the tax return.

Background

At March Budget 2015 the government published ‘Making Tax Easier: The end of the tax return’ setting out a vision to modernise the tax system by replacing tax returns with digital tax accounts for millions of individuals and businesses. This is now changed to Making Tax Digital.

At the same time the introduction of ‘Making Tax Easier: Simpler Payment’ was announced. This set out plans to introduce legislation to remove the need for customers to complete a tax return with information that HMRC already holds, simply to pay their tax bills. This is now changed to Simple Assessment.

Comments on the change are being accepted until 3 February 2015 at simple.assessment@hmrc.gsi.gov.uk.