Simple Assessment Explained: The PA302 Letter and What to Do When the Figures Are Wrong

A Simple Assessment is not a tax return you fill in. It is HMRC telling you what it has already decided you owe, worked out from figures other people handed over — your bank, your pension provider, the Department for Work and Pensions. The letter is called a PA302. And if the numbers on it are wrong, nothing corrects itself. GOV.UK is blunt about the window: you must “call or write to HMRC within 60 days of the date on your tax bill if you think the amounts in the calculation are wrong”. Sixty days from the date printed on the letter, not from the day it landed on your mat.

That matters more this year than it used to. In a news release dated 28 July 2026, HMRC said it would issue around 1.8 million Simple Assessment letters, going to working-age customers from 30 June 2026 and to pensioners from 12 August 2026, with a second tranche between October and December 2026 built on bank and building society interest data. A lot of those letters carry a savings-interest figure. A lot of those savings-interest figures are worth checking twice.

What a PA302 actually is

GOV.UK describes it plainly: HMRC sends you a Simple Assessment tax bill, also called a PA302, when you did not pay enough tax and it could not collect the shortfall through your tax code. It is a calculation, not a request for information. HMRC has done the sums and is telling you the answer.

According to GOV.UK, you may get one if you owe Income Tax that cannot be collected through your tax code, owe £3,000 or more in tax, need to pay tax on your State Pension, or have untaxed income such as savings interest or dividends.

That last category is the growth area. Your bank or building society tells HMRC how much interest it paid you at the end of the year. If you are employed or drawing a pension, HMRC will usually change your tax code so the tax comes out automatically. If it cannot do that — you have retired, your code has no room left, the amount is too big — a PA302 turns up instead.

The State Pension is the other big driver. It is taxable income, but tax is not deducted from it. If you also have a private pension, that provider normally collects the tax on your State Pension through your code. If the State Pension is your only income and it takes you over your Personal Allowance, GOV.UK says HMRC will send you a Simple Assessment tax bill. We have written separately about why pensioners are getting surprise HMRC tax bills, which is the same machinery seen from the other end.

Simple Assessment vs self assessment: the differences that bite

People use the two names interchangeably and then make expensive assumptions. GOV.UK states directly that Simple Assessment is not the same as making a self assessment tax return. Here is what actually differs.

The bottom row is the whole point. In self assessment you declare and HMRC may check. In Simple Assessment HMRC declares and you must check, inside a fixed period, or the number stands. If you are not sure which regime you are in, our guide to self assessment deadlines and penalties sets out who has to file at all.

How to read your PA302 line by line

GOV.UK says your Simple Assessment shows your taxable income (for example income from pay, pensions or state benefits), any Income Tax you have already paid, the amount of tax you owe, and a 14-character payment reference starting with X. Behind that is a detailed breakdown of the calculation. Work through it in this order.

• The tax year. Printed at the top. A letter issued now normally covers 6 April 2025 to 5 April 2026. Every figure below has to belong to that year and no other.
• Employment and pension income. Check against your P60 or P45 for that year. If you changed jobs, check you have not been given the same pay twice.
• State Pension or benefits. Find the award letter covering that tax year. GOV.UK tells you to multiply weekly payments by 52, fortnightly by 26 and monthly by 12. Uprating happens in April, so an award letter dated after 6 April will not give you the whole year on its own.
• Savings interest. Check every account against a bank statement or, better, a certificate of interest. This is the line that goes wrong most often.
• Tax already paid. Compare with the tax deducted boxes on your P60 and any pension payslips.
• The allowances applied. Personal Allowance and, if savings interest is in the calculation, the Personal Savings Allowance.

If a line makes no sense at all, our HMRC letter decoder will tell you what the reference on the envelope means before you phone anyone. And if the recalculation ends up in your favour rather than HMRC's, the tax refund calculator will show you roughly what you are owed back.

The three errors people are actually finding

1. ISA interest included when it is tax-free

Interest inside an ISA is tax-free and does not count towards your Personal Savings Allowance — GOV.UK says savings in tax-free accounts like ISAs do not count towards your allowance. It should never appear in a Simple Assessment calculation as taxable income. It sometimes does, usually where a bank holds both an ISA and an ordinary account for the same customer and the reporting has not separated them.

Worked example. Nadia’s PA302 shows savings interest of £2,450. Her own records show £1,180 from an easy-access account and £1,270 from a cash ISA. She is a basic rate taxpayer, so GOV.UK gives her a Personal Savings Allowance of £1,000.

• HMRC’s version: £2,450 − £1,000 = £1,450 taxable at 20% = £290.
• Correct version: £1,180 − £1,000 = £180 taxable at 20% = £36.

Nadia has been asked for £254 she does not owe. One phone call and a copy of the ISA statement fixes it — but only if she makes the call inside 60 days.

2. Joint account interest not split

Interest on a joint account belongs to both holders, not one. HMRC’s own Savings and Investment Manual says that for spouses and civil partners “each will normally be taxable on half of the interest, under ITA07/S836”, and that other joint holders are taxed on the interest they are actually entitled to, which in most cases means an equal split. Banks, though, often report the full amount against the first-named account holder. If that is you, your PA302 can show double your real interest.

Worked example. Ray and Delphine have a joint savings account that paid £3,600 of interest. Ray is first-named. His PA302 shows the whole £3,600. Ray has a pension income of £22,000, so he is a basic rate taxpayer either way, with a £1,000 Personal Savings Allowance.

• HMRC’s version: £3,600 − £1,000 = £2,600 at 20% = £520.
• Correct version: his half is £1,800. £1,800 − £1,000 = £800 at 20% = £160.

Ray has been over-assessed by £360. Delphine, meanwhile, may owe nothing at all on her £1,800 half if it sits inside her own allowance, so the couple's real bill is £160 rather than £520. Run your own numbers through the savings interest tax calculator before you ring HMRC, so you can tell them what the figure should be rather than just that it is wrong.

3. An interest figure that belongs to a different year

The third pattern is subtler. The interest on the letter looks plausible but does not match the year it is supposed to cover — it reflects balances or rates from an earlier period. It shows up most where someone moved money mid-year, closed a fixed-rate bond, or saw a rate change after the account anniversary. Fixed-rate bonds that pay all their interest at maturity are a classic: several years of interest can land in one tax year, and getting the year wrong shifts the whole assessment.

Do not assume the number is right because it is in the right ballpark. Compare it, account by account, against the certificate of interest for that specific tax year. Our guide to tax on savings interest and the Personal Savings Allowance explains how the allowance interacts with your other income, and the ISA allowance rules cover which accounts are outside the calculation entirely.

The two clocks: 60 days to query, and the deadline to pay

These are separate periods and they run at the same time. Missing either one costs you something different.

Note what the payment rule does not say. There is no extension for having a query open. GOV.UK states that you must carry on paying your original bill unless HMRC agrees you can delay it. Querying and paying are not alternatives.

To pay, you need the 14-character reference beginning with X from the letter itself. GOV.UK warns that using the wrong reference may delay your payment or send it towards a different tax liability, so copy it exactly. You can pay in full or in a series of smaller payments, as long as the whole amount reaches HMRC by the deadline — the details are on GOV.UK’s how to pay page.

What happens after you query, and when an appeal becomes possible

This is the part almost nobody understands until they are in it. A query and an appeal are two different stages, and you cannot skip to the second.

You contact HMRC within 60 days. GOV.UK says to tell them which amounts you think are wrong and what the amounts should be, and to include records showing how you checked — payslips, bank statements, pension records. Then one of two things happens.

• HMRC agrees. You are sent a new Simple Assessment with an updated tax calculation. The old figure is replaced; you pay the new one.
• HMRC disagrees. You get a decision letter explaining why, telling you how to pay, and setting out how to appeal.

Only at that second point does an appeal exist. There is nothing to appeal against while the query is open, because HMRC has not yet made a decision. Once the decision letter is issued you have 30 days from the date on it to appeal, and the letter tells you how. So the realistic sequence is 60 days to raise it, however long HMRC takes to answer, then a hard 30 days to challenge the answer.

Put both dates in a calendar the day the letter arrives. Write your query rather than only phoning it, or phone and then confirm in writing, so you have a dated record of when you raised it. If you end up needing to put a formal case in writing, the HMRC complaint and refund letter generator will structure it for you. The full procedure is on GOV.UK.

If the bill is right but you cannot pay it

Do not treat an unaffordable bill as a wrong bill. A query on figures you know are correct will not buy you time; it will just produce a decision letter confirming the amount. GOV.UK points people who cannot pay on time to its guidance on difficulties paying HMRC, and there is a Simple Assessment payment plan service. Ask about a payment arrangement rather than letting the deadline pass in silence.

And check the rest of your tax position while you have the paperwork out. A PA302 arriving often means your tax code was not doing its job — our guide to UK tax codes and what yours means covers how untaxed interest gets built into a code, and the Personal Allowance explained covers the allowance the whole calculation starts from. Get the code right and next year’s letter may not need to come at all.