Hundreds of thousands of taxpayers have been hit with small tax bills after HMRC dramatically ramped up the number of end-of-year demands it sends out.
New figures show the tax authority pursued around 300,000 people for sums of £100 or less, fuelling criticism over whether chasing such “trivial” amounts is worth the cost.
Data obtained through a Freedom of Information request shows HM Revenue and Customs (HMRC) sent out a record 1.32 million simple assessment demands in the 202324 tax year, around double the average of the previous six years.
Of these, 317,000 demanded £100 or less, while almost half 647,000 notices were for sums under £300.
The approach has been criticised by those who argue the cost of issuing and chasing these bills may outweigh the money collected.
However HMRC has defended its actions, saying it is legally required to recover all tax owed and has previously said it is justified in using private debt collectors to chase debts as low as £89.
Steve Webb, the former Liberal Democrat pensions minister who now works as a partner at consultancy LCP, obtained the data and warned the total could soon exceed two million.
The state pension has risen by 13 per cent between April 2023 and April 2025, suggesting demand numbers will have climbed further still.
“Far too many people are receiving demands for trivial amounts of money which in some cases probably cost more to collect and process than they raise in tax,” Mr Webb said.
He described the current approach as allowing “the system to evolve by stealth” and called on ministers to consider whether the bureaucracy involved represents “unnecessary hassle for taxpayers and a waste of official time and effort.”
Many recipients are pensioners whose sole income is the state pension but who lack a PAYE code through which tax could be collected automatically.
More people are finding themselves tipping over the tax thresholds by small amounts
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GETTYIan Futcher, from wealth management firm Quilter, attributed the surge directly to fiscal drag.
He said: “As tax thresholds remain frozen while incomes, pensions and investment returns creep higher, more people are finding themselves tipping over the tax thresholds by small amounts, increasing the burden both on the individual and HMRC to administer what often amounts to nothing more than £100.”
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The frozen personal allowance of £12,570, introduced by the Conservatives in 2022 and extended by Chancellor Rachel Reeves until 2031, has pulled growing numbers into the tax net.
Mr Futcher noted that simple assessments are increasingly reaching people who never considered themselves taxpayers, often because a rising state pension combined with modest additional income has pushed them over the threshold.
For many, the demand arrives as an unwelcome surprise.
For many, the demand arrives as an unwelcome surprise
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GETTYSeparate from the simple assessment controversy, millions of taxpayers face their own deadline pressure.
HMRC estimates that 5.65 million people have yet to submit their Self Assessment returns ahead of the 31 January cut-off.
More than 6.36 million have already filed, with 54,053 choosing New Year’s Eve and New Year’s Day to complete their submissions. Those who miss the deadline face an immediate £100 penalty, with further charges accumulating thereafter.
Myrtle Lloyd, HMRC’s Chief Customer Officer, urged procrastinators to act swiftly: “New Year is a great time to start afresh. What better way than to ensure your tax affairs are in order for another year than completing your tax return.”
Sarah Coles, head of personal finance at Hargreaves Lansdown, described Britain as “a nation of last-minute procrastinators” and warned that leaving submissions late increases the risk of errors.
The Chancellor announced that from April 2027, Some state pensioners would be exempt from paying small amounts of tax through simple assessment
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GETTYIn her November Budget, the Chancellor announced that from April 2027, pensioners whose only income is the state pension would be exempt from paying small amounts of tax through simple assessments.
However, Mr Webb cautioned that this solution addresses only a narrow group while leaving others exposed.
“The Chancellor said that the Government would not be collecting ‘small’ amounts of money from a select group of pensioners in the coming years, but will apparently go on collecting even smaller amounts from other pensioners and savers through the ‘simple assessment’ process,” he said.
The full new state pension currently stands at approximately £12,000 annually and will rise to £12,548 from April, just below the £12,570 threshold.
An HM Treasury spokesman defended the current system, stating that tax paid by workers on low or average incomes remains at historically low levels and that Britons benefit from the highest personal allowance among G7 nations.