HMRC tax bill warning as pensioners receive 'simple assessments'

Hundreds of thousands of UK pensioners have been left reeling from unexpected tax demands after receiving HMRC "simple assessments," with experts sounding the alarm that more retirees are being ensnared by the tax system.

HMRC figures show that a record 1.32 million simple assessments were dispatched in the 2023-2024 tax year, marking a 74% surge from the previous year.

A spokesperson for said: "We are seeing the full effects of fiscal drag in action. The Government's decision to freeze income tax thresholds while increasing the state pension has created a perfect storm - one where more pensioners are unknowingly pushed into the tax system."

Experts warn that many pensioners who believed their earnings were too low to be taxed are now facing demands from HMRC, causing undue stress, especially for those on fixed incomes who thought they were safe from the taxman's grasp.

The current tax-free personal allowance is pegged at £12,570; however, with the state pension amount climbing due to the triple lock and additional private pension income, it's all too easy for retirees to inadvertently breach this threshold.

Specialists say that numerous retirees are getting surprise tax bills due to HMRC's "simple assessment" mechanism.

The experts said: "The tax rules haven't changed - but people's income has, and that's what's catching people out. These aren't high earners. They're ordinary pensioners who might only be a few hundred pounds over the allowance, but they're now being treated like underpaying taxpayers."

What is HMRC simple assessment?

Simple assessments are issued by HMRC when they believe they have enough information to calculate what is owed. Nonetheless, this, warn pension experts, creates confusion among retirees: "Most pensioners don't expect to hear from HMRC unless they've done something wrong - so receiving a formal tax bill with little explanation feels intimidating. Many are left unsure how to challenge it and reaching HMRC for support has become increasingly difficult."

Therefore, the specialists at Spencer Churchill Claims Advice urge HMRC to undertake a comprehensive examination of how the tax system handles retirees. This is especially significant given that certain tax thresholds will be frozen until at least 2028, implying that the number of retirees who owe tax may grow if existing regulations are maintained.

"This issue is only going to grow. If current policies continue, we expect even more pensioners to face tax demands in the coming years. There needs to be clearer communication and a more supportive system in place for those being caught out through no fault of their own."

For those retirees who may not grasp why they have incurred tax debt, experts recommend obtaining professional counsel. Review HMRC's computation to determine whether it contains a comprehensive statement of their income and benefits.

The spokesperson further advised: "We'd urge any pensioner who's confused or concerned by a recent tax demand to get advice before paying. It's possible that income or allowances have been miscalculated, and there may be ways to challenge the bill."