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All you need to know about Student Loan repayments

Article ID: 2159
Last updated: 13 Aug, 2019

Overview:

The student loan repayment due for the year is calculated from your income in the tax year not the amount of debt remaining. The repayment amount will be 9% of all net adjusted income (above a threshold) until the debt is cleared. If you are employed, the repayment will have been collected monthly through PAYE by HMRC, then sent to the Student Loans Company (SLC) annually in March. If you have other types of income (self-employed, savings interest, property etc) then the 9% calculation may also result in a payment being due, (or an additional payment if you are also employed).

Please note: Any direct payments made to SLC will only reduce the overall debt (hence the loan will be cleared earlier). They must NOT be entered into the tax return as they will affect the (9%) calculation.

If the loan was repaid during year or expected to be repaid in next 24 months, then see section Expected to be repaid in next 24 months:

Payment Thresholds:

The income thresholds for triggering repayments to SLC depend on which Plan is in place for the loan. If you are unsure we recommend that you contact the SLC or see https://www.slc.co.uk/

Tax year Plan 1 Plan 2
2019-20 £18,935 £25,725
2018-19 £18,330 £25,000
2017-18 £17,775 £21,000
2016-17 £17,495 £21,000

Postgraduate Loans

From the 6th April 2019 the Department for Education (DfE) have introduced a new loan type known as Postgraduate Loan (PGL). For 2019/20 the threshold is £21,000. Any earnings above £21,000 for the PGL loan will be calculated at 6%.

Employed - entering your PAYE loan amounts and Plan type:

Your P60 and payslips will show the repayments made in the tax year. In order to enter this information in TaxCalc, please see the below:

SimpleStep mode

  1. On the left navigation menu, select Your Work> Employment.
  2. Next Step to the screen Pay received and tax paid
  3. Enter the amount deducted into student loan repayments deducted by your employer
    1. If you have had more than one employment which deducted SLC payments then enter the deductions in the appropriate employment pages.
  4. Complete the rest of your tax return, until you reach the screen Working out your tax
  5. Select the plan type from Which student loan repayment plan are you eligible for?

For loans under both Plan 1 and Plan 2, you must select Plan 1 as HMRC’s calculations only allow for one plan type. The SLC will later allocate repayment as required to both loans.

  1. If you think your loan will be repaid within the next two years tick the box then see section Expected to be repaid in next 24 months:

HMRC Forms mode

  1. Complete the Employment page(s) as required. You will need 1 set of pages per employer.
  2. On the left navigation menu, select SA100 Core Return > Page 5
  3. Tick Box 1 and select the Plan type from the drop down menu

For loans under both Plan 1 and Plan 2, you must select Plan 1 as HMRC’s calculations only allow for one plan type. The SLC will later allocate repayment as required to both loans.

  1. Enter the total amount of SLC deductions (from all employments if more than one) in Box 2 (Do NOT include any direct voluntary payments to SLC)
  2. If you think your loan will be repaid within the next two years tick box 3 then see section Expected to be repaid in next 24 months:

No employment income, but SLC loan repayment due:

Ensure you are using HMRC Forms Mode, complete the below steps:

  1. On the left navigation menu, select SA100 Core Return > Page 5
  2. Tick Box 1 and select the Plan type from the drop down menu (Do NOT enter any direct voluntary payments to SLC)
  3. If you think your loan will be repaid within the next two years tick box 3 then see section Expected to be repaid in next 24 months:

Calculation of SLC loan repayment due:

The balance of the student loan amount is shown on the SA302 Summary, found within Summaries on the left-hand menu. If you only have employment income then the calculated amount may sometimes match the amount taken be your employer exactly and no SLC entry will be shown on the SA302. The full calculations of the student loan repayment is shown in the HMRC Tax Calculation Summary, found within Summaries on the left-hand menu. Section 21, pages 44-46 provides full details.

This is very important to ensure that only the last few final amounts required to pay off all the SLC loan are made.

Using this box and internal monitoring of loan accounts (HMRC/SLC) will trigger SLC to write to you offering to switch you to Direct Debit payments (rather than via PAYE deductions). It is recommended that you switch to DD as these will stop when the loan is repaid. If you do not switch to DD then SLC repayments will continue to be deducted via PAYE and any SLC repayments due via the tax return will be calculated for the complete tax year. Both of these will result in an overpayment of the SLC loan and later delays in proving/obtaining a refund.

Please note: If you have not heard from SLC in this respect we recommend that you contact them to check if you will be eligible to switch to DD soon.

Loan was paid off during year:

(And you have not been paying SLC via direct debit)

If your loan was paid off during the tax year then it is probable that HMRC’s SLC calculations (9%) will create an overpayment scheduled for payment by January 31. (PAYE deductions may also have already caused an overpayment of the SLC loan). This is because HMRC applies the calculations of repayments to the whole tax year, even if the loan was paid off part way through the year. You can't amend the calculations on your tax return because they must match the HMRC calculations to pass online submission. What you should do next is listed below:

  1. Contact SLC on 0300 100 0611 or 0300 100 0370 if you live in Wales.
    1. Get SLC and HMRC to sort out the overpayment amount between them
    2. Follow SLC’s guidance on what adjusted figure to pay to HMRC by January 31st or pay the full amount by January 31st, then start the refund process with SLC.
  2. Submit your SA100 tax return online as soon as possible (preferably before 30 September)

What you actually have to do is VERY dependent on how close to September you are before you speak to SLC.

Article ID: 2159
Last updated: 13 Aug, 2019
Revision: 16
Views: 3852
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Also listed in
folder Tax Return Production -> SA100 Individual Return