HM Revenue and Customs (HMRC) has posted over 300,000 letters to UK taxpayers demanding payment of what have been labelled "trivial" sums, often less than £100. The so-called "brown envelope" demands have sparked criticism for costing more to process than they potentially recover.
Record Number of Simple Assessments Issued
Figures obtained through a Freedom of Information request reveal that HMRC issued a record 1.32 million "simple assessments" in the 2023-24 tax year. This number is double the average for the previous six years. Of these, approximately 317,000 demands (24%) were for amounts of £100 or less, while 647,000 were for £300 or less.
The head of HMRC has previously defended the practice of using debt collectors to pursue taxpayers for sums as low as £89. While the tax authority has a legal duty to collect all money owed to the Treasury, it faces accusations of wasting taxpayer funds on chasing disproportionately small amounts.
Fiscal Drag Blamed for Rising Trivial Demands
Experts point to fiscal drag as the primary driver behind the surge in minor tax bills. With income tax thresholds frozen until 2028, while wages, pensions, and investment returns slowly increase, more people are being pulled into the tax net or into higher bands by marginal amounts.
Ian Futcher, of wealth management firm Quilter, explained: "The steady rise in HMRC asking people for trivial amounts of tax back via simple assessment is a direct result of fiscal drag. As tax thresholds remain frozen while incomes creep higher, more people are tipping over the thresholds by small amounts."
He added that these assessments often shock recipients, particularly pensioners who may not consider themselves taxpayers, but whose state pension combined with modest extra income has breached the frozen personal allowance.
Critics Decry 'Bureaucratic Hassle' and Waste
Steve Webb, a former Liberal Democrat pensions minister now at consultancy LCP, criticised the system's inefficiency. "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," he stated.
Webb also highlighted a contradiction in government policy, noting that while the Chancellor has promised not to collect small debts from some pensioners, the "simple assessment" process continues to target others with even smaller sums. He called for a full government review: "It is time the Government took a step back and assessed whether all the bureaucracy involved in this entire process represents unnecessary hassle for taxpayers and a waste of official time and effort."
In response, an HM Treasury spokesman emphasised the overall tax burden, stating: "The tax paid by a worker with a low or average income is at a historically low level and Britons benefit from the highest personal allowance among the G7."
