20 May 2025
New figures obtained by Quilter, the wealth manager and financial adviser, under the Freedom of Information Act reveal that HMRC issued 1.32 million simple assessments in the 2023/24 tax year, up 74% from 757,745 the year before.
This marks the highest number on record and nearly triples the volume issued five years ago.
A simple assessment is a method HMRC uses to collect tax without requiring the taxpayer to complete a self-assessment return. Instead, HMRC issues a tax bill directly when it believes the calculation is straightforward, often where it holds enough information about an individual's income.
These are typically used for pensioners or employees who underpay tax due to changes in income that aren't fully accounted for by PAYE during the year.
While intended to streamline tax collection, their growing use reflects in part the increasing number of pensioners being drawn into the tax system. This is particularly the case as state pension rises push more people over their personal allowance.
The full figures show the scale of the increase over recent years:
• 2017/18: 486,340
• 2018/19: 711,390
• 2019/20: 593,637
• 2020/21: 582,211
• 2021/22: 675,442
• 2022/23: 757,745
• 2023/24: 1,320,755
The data shows a steep acceleration in the number of taxpayers being automatically assessed for underpaid tax. HMRC cites a number of reasons for the significant increase in the FOI.
One major factor is rise in the number of state pensioners who also have other income in retirement which is subject to income tax collection via PAYE.
Since the state pension is paid without any tax deducted at source, those who also receive other income, such as a private pension or earnings, have their State Pension taken into account via reductions to their tax code. While this reduces the need for pensioners to complete self-assessment tax returns, errors in tax codes can occur especially for pensioners due to State Pension miscalculations.
Another key driver is the continued freezing of tax thresholds until 2028, which means that as incomes rise with inflation, more people are pushed over the personal allowance and become liable for income tax. This applies even if their purchasing power has not improved. This stealth tax effectively increases the tax burden year-on-year without any change in headline rates.
A further contributor is the sharp rise in state pension income driven by the triple lock, which ensures the state pension increases each year in line with the highest of inflation, average earnings or 2.5%. With inflation having surged recently, the state pension has seen unusually large increases, which again pushes more pensioners over the tax threshold.
All of these trends are compounded by high inflation and rising earnings, which continue to swell the tax base and increase the number of people subject to simple assessments.
Jon Greer, head of retirement policy at Quilter, comments:
“This is yet another sign of fiscal drag in action. Millions are sleepwalking into the tax system through no fault of their own. The sharp rise in simple assessments reflects how frozen tax thresholds and higher state pensions are creating more tax liabilities for older people. Many of them may not even realise they owe anything until HMRC’s letter arrives.”
“While simple assessments are meant to simplify tax collection, they can catch people off guard, especially pensioners who don’t complete a tax return and assume their income is below the tax-free threshold. The government’s freeze on allowances is quietly swelling the tax base. Unexpected tax bills can be scary especially if you are already struggling with your finances. If you get one and don’t know what to do, the best course of action is to call HMRC to discuss your options. Do not bury your head in the sand.”
