Simple Assessment letters for 2025/26, what to check and when to pay
Overview
HMRC expects to issue around 1.8 million Simple Assessment letters for the 2025/26 tax year. Known as PA302 letters, these set out HMRC’s calculation of Income Tax that has not been collected through PAYE or Self Assessment. Receiving one is not, by itself, a penalty or a tax investigation.
Letters may cover savings interest, dividends, pension income or other underpaid tax that HMRC cannot collect through a tax code. Check the calculation against your records, contact HMRC within 60 days of the letter date if figures are wrong, and follow the payment deadline. For letters issued on or after 31st October 2026, the payment deadline is normally three months from the letter date, not automatically 31st January 2027.
Detailed Content
What is Simple Assessment?
Simple Assessment allows HMRC to calculate tax using information it already holds, including information from employers, pension providers, banks, building societies and the Department for Work and Pensions.
The letter explains the income included, tax already paid, outstanding tax and payment instructions. It can arrive by post or appear in your Personal Tax Account. If you are unsure whether a communication is genuine, check through GOV.UK or your account rather than following an unexpected payment link.
Who may receive a letter?
Examples include people who:
Owe tax on savings interest or dividends.
Have a second income that has not been fully taxed.
Owe tax on pension income, including their State Pension.
Received more tax-free allowance through PAYE than they were entitled to.
Owe tax that cannot be collected through their tax code, including larger bills, typically £3,000 or more.
£3,000 is not a minimum Simple Assessment bill. Smaller bills can arise where coding cannot collect the tax.
A letter does not automatically remove a separate obligation to file a Self Assessment return. Freelance or business income may require registration and a return. If you already complete Self Assessment and receive a PA302 covering the same income, contact HMRC or your accountant to resolve the overlap rather than paying twice or ignoring the letter.
When are the 2025/26 letters being sent?
HMRC’s published timetable says working-age customers began receiving letters from 30th June 2026 and pensioners from 12th August 2026. A second batch relating to bank and building society interest is scheduled for October to December 2026.
The 1.8 million figure is an expected total, not confirmation that all letters have been issued. ICAEW reports that 675,000 letters were issued for 2021/22, substantially fewer than the expected 2025/26 total.
Why are more people affected?
Frozen allowances, rising pension or employment income and higher savings interest can bring more people into tax. The standard Personal Allowance is £12,570, although individual entitlement can differ.
Yorkshire Building Society’s August 2026 analysis of CACI data estimated that non-ISA accounts forecast to earn more than £1,000 interest increased from around 462,000 in January 2018 to 5.3 million in January 2026, a reported rise of 1,047%.
These are accounts, not individual taxpayers or confirmed tax bills. Tax depends on each person’s total interest, other income and available allowances. The figures do not establish how much of the rise in Simple Assessments is caused by savings interest.
Savings allowances and examples
The Personal Savings Allowance is normally:
£1,000 for basic-rate taxpayers.
£500 for higher-rate taxpayers.
£0 for additional-rate taxpayers.
Unused Personal Allowance and the starting rate for savings, potentially up to £5,000, may also shelter interest for people with lower other income. ISA interest is normally tax-free. Interest across taxable savings accounts must be considered together.
At a constant 4% annual interest rate, £25,000 produces £1,000 interest and £12,500 produces £500. These amounts reach, rather than exceed, the respective savings allowances. More interest could produce a tax bill if no other allowance applies. They are illustrations, not universal savings limits.
How to check the bill
Compare the calculation with P60s, P45s, bank interest statements, pension information, benefit award letters and relevant relief records. Check the tax year, income, tax deducted and allowances. Do not assume HMRC’s figures are correct, but equally do not assume a difference proves an error.
HMRC may issue a revised assessment after receiving new information. The latest bill shows the total tax for the year, including amounts in earlier bills. Deduct payments already made when checking the remaining balance.
Queries and appeals
Call or write to HMRC within 60 days of the date on the bill if any amounts are wrong. Explain which figures need changing, what they should be and the evidence supporting your query.
If HMRC disagrees, it will issue a decision letter explaining the appeal route. You normally have 30 days from that decision letter to appeal. A query does not automatically suspend payment: pay by the deadline unless HMRC confirms a delay.
If you have missed a challenge deadline, seek advice promptly. Do not assume that correction is impossible or that a late challenge will automatically be accepted.
Payment deadlines and instalments
For 2025/26:
A letter received before 31st October 2026 normally requires payment by 31st January 2027.
A letter received on or after 31st October 2026 normally requires payment within three months of its date.
Check the date shown on your own letter. You can pay in full or make smaller payments before the deadline, but the full balance must be cleared by that date unless HMRC agrees otherwise.
Payment routes include the HMRC app, GOV.UK online payment, bank transfer and cheque. Use the 14-character reference starting with ‘X’ from the PA302, not an unrelated tax reference.
If you cannot pay on time, contact HMRC early about a Time to Pay arrangement. Approval depends on your circumstances and affordability; it is not automatic. Ignoring the bill can lead to debt recovery action.
Step by Step Procedure
Read the PA302 promptly and check that it is genuine.
Record the tax year, letter date, 60-day query deadline and payment date.
Gather income, interest, pension, tax deduction and relief records.
Check the figures and whether earlier assessments or payments cover the same tax.
Raise errors with HMRC within 60 days and retain correspondence.
If HMRC rejects your query, review the decision letter and its 30-day appeal deadline.
Pay using the PA302 reference, or request payment support before the due date. Do not assume a dispute stops payment.
Check whether other income requires Self Assessment. Review future savings tax exposure separately; moving savings into an ISA does not cancel tax already due.
Frequently Asked Questions and Answers
Is this a tax investigation or fine?
No. A PA302 is a tax assessment. Receiving one is not, by itself, an investigation or a penalty.
Does everyone have until 31st January 2027 to pay?
No. Letters received on or after 31st October 2026 normally allow three months from the letter date. Follow your own bill’s deadline.
Can I pay in instalments?
You can make smaller payments provided the full amount is paid by the deadline. To pay beyond that date, contact HMRC about an agreed arrangement.
What if I disagree?
Query incorrect figures within 60 days of the bill date. If HMRC rejects the query, its decision letter explains the appeal procedure, normally with a 30-day deadline. Payment remains due unless HMRC agrees to delay it.
Can I receive a bill for less than £3,000?
Yes. HMRC can issue smaller bills where tax cannot be collected through a tax code, for example where there is insufficient taxable pay or pension to collect it.
Does the letter mean I do not need Self Assessment?
Not necessarily. Simple Assessment avoids a return for income correctly dealt with through that assessment, but other circumstances may still require a return. If you already file, ask HMRC or your accountant to resolve any overlapping assessment.
Can 360 Accounts help?
360 Accounts can help review the calculation, identify missing information, explain the deadlines and support contact with HMRC where appropriate.