Simple Assessment Tax Calculation: PA302, Adjustments, and Deadlines

A Simple Assessment tax calculation is HMRC’s own working-out of what you owe when your affairs are too straightforward for a Self Assessment return but can’t be settled entirely through PAYE. HMRC pulls together the income figures it already holds, subtracts your Personal Allowance and any other reliefs, applies the standard tax bands, deducts tax already collected through payroll or pension providers, and sends you the balance on a letter called a PA302.¹

What Goes Into the Calculation

HMRC builds your figure from data reported to it during the tax year. For most Simple Assessment recipients that means a state pension amount from the Department for Work and Pensions, any private or occupational pension payments, employment income reported by your employer through PAYE, and savings interest reported directly by banks and building societies.²

The reason Simple Assessment exists at all is that some of this income arrives without tax being deducted at source. The full new state pension is paid gross, so if it alone exceeds the Personal Allowance there is no payroll to adjust. The same problem arises when an employee’s tax code didn’t capture all their income sources and the underpayment is too large to claw back through next year’s code, or when someone owes £3,000 or more, or has stopped receiving a salary through PAYE.¹

The Core Arithmetic

The maths follows the same structure as any income tax bill. HMRC totals your income for the tax year, subtracts your Personal Allowance, and applies the tax bands to what remains.

For 2025–2026 (6 April 2025 to 5 April 2026), the Personal Allowance is £12,570. Income below that is not taxed. For taxpayers in England, Wales, and Northern Ireland, taxable income above the allowance is charged at these rates:³

Basic rate of 20% on the first £37,700 of taxable income, covering total income from £12,571 to £50,270.
Higher rate of 40% on taxable income from £37,701 to £125,140.
Additional rate of 45% on taxable income above £125,140.

Once HMRC has your total tax liability, it deducts any tax already collected during the year through PAYE on your wages or private pension. The balance is the figure printed on your PA302.

Adjustments That Change the Figure

Personal Savings Allowance

Interest on savings accounts is taxable, but a separate Personal Savings Allowance shelters part of it. Basic rate taxpayers can earn up to £1,000 in savings interest tax-free; higher rate taxpayers get £500.² Because banks report interest to HMRC directly, this income appears in the assessment whether or not you have declared it yourself.

Marriage Allowance

A married partner or civil partner earning below the Personal Allowance can transfer up to £1,260 of unused allowance to the other. Where one pensioner’s state pension exceeds £12,570 and the other has little income, the transfer reduces the bill by up to £252. HMRC does not apply Marriage Allowance automatically; you have to claim it.⁴

The Personal Allowance Taper

Above £100,000 of adjusted net income, the Personal Allowance falls by £1 for every £2 over the threshold, disappearing entirely at £125,140.⁵ The effect between those two figures is a 60% marginal rate: you pay 40% on the income itself while losing tax-free allowance at the same time. Most Simple Assessment recipients sit well below this, but a large private pension or investment income can push you into it.

Scottish Rates

Scottish taxpayers pay different rates on non-savings, non-dividend income. For 2025–2026, Scotland uses six rates, from a 19% starter rate on the first £2,827 of taxable income up to a 48% top rate above £125,140.⁶ Your PA302 should apply these if your tax code starts with an “S.” If it doesn’t and you live in Scotland, query it.

Checking the PA302 Against Your Records

The PA302 lists your income sources, the allowances applied, the tax due, and any PAYE tax already paid. You can also view it in your HMRC Personal Tax Account online.⁷ Errors are not rare, particularly where a pension changed part way through the year or savings interest was estimated by the bank rather than reported precisely.

For employment income, start with your P60. It shows total pay and tax deducted for the year, and your employer must issue it by 31 May after the tax year ends.⁸ If you had benefits in kind such as a company car or private medical cover, check the cash-equivalent figures on your P11D.

For state pension, the annual uprating letter from the Department for Work and Pensions gives the exact gross amount paid. If your pension rose mid-year, make sure the assessment reflects both amounts for the correct number of weeks. For savings, compare the interest figure on the PA302 against your bank statements or the annual interest summary; discrepancies often come from an estimated bank return or from the Personal Savings Allowance not being applied.

Correcting a Wrong Calculation

If the numbers don’t match your records, you have 60 days from the date on the PA302 to contact HMRC and challenge the calculation.¹ After that, the assessment becomes final and enforceable.

Query by phone or in writing, and be specific: identify the income figure or allowance you think is wrong, state what the correct amount should be, and cite the document that shows it, whether that is your P60, DWP letter, or bank statement. If HMRC accepts the correction, it will issue a revised PA302. If it refuses, it will send a formal decision letter, and you then have 30 days from that letter to lodge a formal appeal.¹

A late challenge after the 60 days is only possible with a reasonable excuse: serious illness, a hospital stay, a bereavement close to the deadline, or a fire or flood that stopped you dealing with your affairs.⁹ Not receiving a reminder, finding the online system awkward, or simply missing the deadline will not qualify. If you do have a valid reason, act as soon as the obstacle lifts.

Payment Deadline and Late Payment Interest

When you pay depends on when the letter arrives. A PA302 received before 31 October is due by 31 January of the following year; one received on or after 31 October is due within three months of the date on the letter.¹⁰

Interest runs automatically from the day after the deadline until HMRC receives the money. The current late payment rate is 7.75%, set at the Bank of England base rate plus 4 percentage points, and it rose in April 2025 from base plus 2.5%.¹¹ On a £1,000 bill, that works out at roughly £77.50 a year. HMRC does not currently charge separate late payment penalties on Simple Assessment debts, only interest, which is different from Self Assessment where penalties stack on top at 30 days, 6 months, and 12 months overdue.

1
GOV.UK. Check Your Simple Assessment Tax Bill
2
GOV.UK. Tax on Savings Interest – How Much Tax You Pay
3
GOV.UK. Income Tax Rates and Allowances for Current and Previous Tax Years
4
GOV.UK. Marriage Allowance – How It Works
5
Legislation.gov.uk. Income Tax Act 2007 – Personal Allowances
6
mygov.scot. Scottish Income Tax – Current Rates
7
GOV.UK. Simple Assessment Guide for Pensioners
8
GOV.UK. Your P45, P60 and P11D Form
9
GOV.UK. Disagree With a Tax Decision or Penalty
10
GOV.UK. Pay Your Simple Assessment Tax Bill – Overview
11
GOV.UK. HMRC Interest Rates for Late and Early Payments