MoneyWeek- HMRC simple assessments

Frozen thresholds risk turning tax creep into tax chaos, Frozen allowances are dragging more savers and pensioners into HMRC’s net, the 1.4 million Simple Assessments issued last year are proof. For many, it’s their first encounter with self-assessment, and the experience is confusing, stressful, and outdated. Letters often land without warning, phone lines mean hours on hold, and you can’t even email HMRC; a 20th century system for a 21st century problem.
This isn’t just fiscal drag; it’s administrative drag too. Unless thresholds are unfrozen, more ordinary people will face surprise tax bills, the risk of paying the wrong amount, and unnecessary stress. People can protect themselves by checking tax codes and keeping records, but fundamentally this is a problem created by policy, not by savers.”

Frozen and reduced allowances mean more people are being hit with unexpected Simple Assessment bills from HMRC. It’s daft really — allowances like the dividend allowance were originally set high to keep small investors out of the system, as the admin often cost HMRC more than the tax raised. Paying online is simple enough, but the real issue is the shock of the bill and the time it takes taxpayers to deal with what, given the sums involved, can often be a complete waste of time for everyone.

Nobody likes getting a letter from HMRC. For a long time interest was so paltry that it was difficult to gain more than the threshold. Higher interest rates and tighter allowances mean that more people are now affected. If you get a bill, check it and make sure it's right as HMRC do make mistakes. If you don't want a bill in future years, make sure you use things like your ISA allowance to shield your money from the taxman.