Joshua Leigh & Co

Worried about a new tax bill? A guide for pensioners 

Recently, many pensioners received surprising news: a tax bill for the first time.

This stems from HM Revenue & Customs (HMRC) decision to send letters to over 140,000 pensioners, who have taxable income but are not filing Self-Assessment.

In total, 560,000 pensioners will receive letters, covering the 2023/24 tax year.

Why is this happening?

The basic rate tax threshold has been frozen at £12,570 for three years, while state pensions have risen in line with inflation.

This means many pensioners now have incomes that cross this threshold, leading to tax liabilities.

If you are one of the 140,000 pensioners who have received a letter from HMRC, you are not alone.

However, this may be your first encounter with the ‘Simple Assessment’ system.

Simple Assessment is a way for HMRC to collect tax directly from those who do not file a Self-Assessment tax return.

The letter you received includes a Simple Assessment tax statement (form PA302), which details the tax you owe for income received between April 2023 and April 2024.

Payment must be made online or via the HMRC app, with deadlines usually set for 31 January 2025 or three months from the date of the statement.

How to manage this new tax bill

For our clients who have received this unexpected tax bill, we advise you:

• Don’t panic: Receiving a tax bill for the first time can be daunting, but it is manageable. Take a deep breath and read through the letter carefully.

• Check the details: Review the calculation provided by HMRC. Ensure all your income sources are correctly listed, including state pensions, savings, and any other income. Look out for any deductions you might be entitled to, such as charitable donations, pension contributions, or professional subscriptions.

• Seek help if needed: If you’re not comfortable using online services, ask a family member or friend to assist you. Alternatively, consider speaking to us.

• Make the payment: Follow the instructions in the letter to make your payment online or through the HMRC app. Ensure you do this by the deadline to avoid any penalties or interest charges.

• Stay informed: HMRC has provided an online guide for Simple Assessment. While there’s no phone helpline, the online resources can be quite helpful. Familiarise yourself with these guides to better understand the process.

Managing an unexpected tax bill doesn’t have to be stressful and by carefully reviewing your HMRC letter, seeking help when needed, and making your payment on time, you can stay on top of your tax obligations.

However, we recognise this process can be complex, and it is easy to overlook important details but speaking to an accountant can simplify and streamline everything for you.

We are here to help you understand your tax bill, ensure all calculations are correct, and guide you through the payment process.

Please reach out to our team for professional assistance – it can make all the difference in managing your finances smoothly.

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