Legislation will be introduced in Finance Bill 2016 to enable HMRC to send a Simple Assessment notice to customers with straightforward tax affairs which will set out their tax liability without the need for the person to submit a self-assessment return.

The legislation will amend section 7 of TMA to remove the requirement on an individual or trustee to notify HMRC that they are chargeable to Income Tax or CGT if the total income and gains consist of sources included in a Simple Assessment for the year of assessment unless the Simple Assessment does not cover all sources of income or gains.

A new section 8C of TMA will be introduced that will allow HMRC to withdraw a notice to file a Self Assessment tax return prior to the issue of a Simple Assessment.

This is the start of the abolition of the annual self-assessment tax return and replacement by digital accounts. While we can see that this will benefit some individuals we have a concern that at present with the informal method of assessing (form P800) HMRC only get employment details correct and do not make it clear which figures are estimates.

Income from investments etc. and reliefs given such as gift aid are invariably estimated and based on the last tax return submitted. The introduction of the £5,000 nil band for dividends and the £1,000 of bank and building society interest (basic rate taxpayers) and £500 of interest (higher rate taxpayers) as tax free from 6 April 2016 should help here although it is unclear whether foreign interest will count.

Two categories of persons will be affected by the proposed changes:

• Non-UK domiciled individuals who have resided in the UK for at least 15 out of the last 20 tax years before the year under consideration
• Individuals, who were born in the UK, acquired a UK domicile of origin at birth and later left the UK and acquired a non-UK domicile of choice, but have then returned to the UK and become resident, but not UK domiciled.

The latter in particular means that the remittance basis would no longer be available. Depending on personal circumstances and assets it might be necessary to leave the UK before 5 April 2017.

Understanding Nudge Letters from HMRC

The nudge letters from HMRC are a strategic tool used to encourage taxpayers to settle disputes or disclose unpaid tax. These letters are sent directly to individuals and should not be assumed to reach your tax agent. Understanding their purpose and how to respond is essential to ensuring you handle them correctly. So, if this is something you are at all concerned about, this blog is for you!

What Are Nudge Letters from HMRC?

Nudge letters are psychological tactics used by HMRC to persuade taxpayers to settle outstanding disputes or disclose undeclared income. They are not formal legal demands but serve as a warning that HMRC is aware of potential tax issues. The letters aim to encourage voluntary compliance before further investigation or enforcement action is taken.

Why You Should Take Them Seriously

• Direct communication – HMRC sends these letters to individuals, not always notifying their tax agent.
• Encouragement to settle – While not a legal demand, ignoring a nudge letter may lead to further scrutiny or investigation.
• Potential tax liabilities – These letters often indicate that HMRC believes there may be undeclared income or unresolved tax matters.

How to Respond to an HMRC Nudge Letter

• Do not ignore it – Even if you believe your tax affairs are in order, seek professional advice.
• Contact your tax agent – Ensure your agent is aware of the letter and can review your position.
• Seek expert guidance – Responding incorrectly can escalate matters with HMRC.

How We Can Help

At Lewis Brownlee, we provide expert advice on nudge letters from HMRC. So, if you receive one, contact us immediately for guidance. We are always here and always happy to help. Plus, we offer a free introductory meeting so that you can find out how we can help before you commit. Falling foul of HMRC is something we should all look to avoid. So, for expertise in compliance and how to keep on top of your account, do get in touch today!

Visit our contact page to speak with our experienced tax specialists.

If you are issued with a notice to file a self-assessment tax return and do not file it on time HMRC can issue a determination of your tax liability within three years of the date that the return was originally due for submission. The Inspector will determine the tax liability to the best of his or her information and belief.

For this to be replaced with the correct figures a return has to be submitted within 12 months of the date of the determination. Otherwise the determined figure become final and conclusive so the only way out of an excessive determination is to claim ‘special relief’. For such a claim to be successful the following three conditions must be met – a) in the opinion of HMRC it would be unconscionable to seek to recover the tax or withhold repayment if already paid, b) the taxpayer’s affairs are otherwise up to date or arrangements made to bring them up to date; and c) the taxpayer has not previously relied on the provision.

So our general advice – do not get into this position in the first place!

Understanding the Transferable Married Couple’s Allowance

The Transferable Married Couple’s Allowance was introduced on 6 April 2015 to help married couples and civil partners reduce their tax bills. However, some taxpayers have experienced difficulties accessing HMRC’s online claim form. If you’re eligible, don’t worry—there are still ways to make your claim.

What Is the Transferable Married Couple’s Allowance?

This allowance enables a lower-earning spouse or civil partner to transfer 10% of their personal allowance to their higher-earning partner. This can provide a tax reduction of up to £252 per year.

To qualify:

• You must be married or in a civil partnership.
• One partner must be a non-taxpayer (earning below the personal allowance).
• The other must be a basic rate taxpayer (earning under the higher rate threshold).

How to Claim the Allowance

Although HMRC’s online claim form is currently inaccessible, there are alternative ways to submit your claim:

• Self-Assessment Tax Return – If you complete a self-assessment tax return, you can include the claim when filing for the year ending 5 April 2016.
• Backdated Claims – If you are not within self-assessment, you have until 5 April 2020 to claim for the 2015/16 tax year.

Once claimed, the allowance is applied automatically each year, provided your circumstances remain the same.

What If You Miss the Deadline?

Failing to claim by the deadline means you may lose the opportunity to benefit from tax relief for previous years. Therefore, it’s crucial to act before the cut-off date.

How We Can Help

If you’re eligible for the Transferable Married Couple’s Allowance but need help submitting your claim, we’re here to assist. At Lewis Brownlee, we provide expert tax advice to ensure you maximise your allowances. So, when you’re ready, we’re ready!

For help with your claim, visit our contact page to speak with our tax specialists today.

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