HMRC has clarified that it will never arrange a debt collector visit to a person's home over an owed tax amount, responding to a query about an elderly pensioner's tax bill.
A person contacted the tax authority on social media after their 89-year-old father received a letter stating he owes tax on his pension. The person asked: "Can you take what he owes out of his pension rather than sending a debt collector round?"
Simple assessment letter explained
HMRC asked whether the letter was a P800 calculation letter or a PA302 simple assessment letter, to which the person confirmed it was a simple assessment letter. A PA302 is sent when income tax is owed and cannot be collected automatically through a tax code, wages or pension.
This can happen if a pensioner receives the state pension and other taxable income above their tax-free allowances, and the amount cannot be collected through a PAYE tax code.
Key tax rules for pensioners
Key rules include: the personal allowance of £12,570 a year from taxable income such as state and private pensions, with no tax to pay on this; a starting rate for savings of an extra £5,000 a year of interest from cash savings, which reduces by £1 for each £1 of taxable income beyond the personal allowance, giving zero starting rate once taxable income reaches £17,570; and a basic rate of income tax of 20 per cent on taxable income above these allowances.
These rules apply in England, Wales and Northern Ireland. Income tax rules in Scotland are slightly different.
Payment options and interest
HMRC told the person: "He can make as many payments as he can before the due date. If the due date has passed and he is still unable to make a payment, then he can set up a payment plan to make it easier." The department also referred them to a Government website page with more information about paying a tax bill through simple assessment.
HMRC added: "PA302 does advise interest will be charged, however at this time interest and penalties will not be applied to any overdue unpaid amount." The authority explained it does not currently charge interest or apply penalties to overdue simple assessment debts.
On debt collection, HMRC said it would "never" arrange a home visit over an owed amount. Any debt collection agencies acting on their behalf will only contact customers by phone, text or in writing.
When asked why the tax could not be deducted from the pension, HMRC said: "No, this is a simple assessment bill. The options of making a payment are using the personal tax account, debit/corporate credit card via gov.uk, cheque, cash at the bank, automated payment service, card over the phone."
A simple assessment letter provides details on how to settle the amount, including online or bank payment information, and sets out the deadline for payment.
