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Student loans repayment question

evilgenius

Active Member
Hi there, today I received a letter notifying me when I'm to begin repaying my student loan (06/04/2011) -last month. I'm lucky that I only owe £15k. My question relates to the new threshold set by the coalition.

Previously the Uk earned income was or is £15k or if my income is above £288/week or £1250 per month. Currently Em unemployed but I don't claim as my wife is the main earner so I have no idea who this now works.

What is the new earned income, I thought this threshold was £21k or has this not come into effect yet?
 

mattclarkie

Distinguished Member
It is still 15k, the new threshold (still to be confirmed) will only apply to people taking loans after 2012.

At the moment it is 9% of any income over £15k (before tax I believe). It is also the income of the person with the loans, so while you are earning nothing you pay nothing (and earn no interest), your wife's' income does not count.
 
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mattclarkie

Distinguished Member
The payments come from your PAYE (assuming you aren't self employed), so they should just not bother you. But it is best to contact them and make sure they know to stop the interest on your loan.
 

s_d_grif

Active Member
If it's a UK goverment student loan, then while you are unemployed it just builds up interest as it did while you were studying.

You do not need to contact SLC or HMRC. The SLC will contact you at some point with a form to confirm your employment/unemployment history (I filled in a couple of these while temping after graduation).

The main thing is to ensure that you do start paying back once you're employed and earning over the threshold as employers and HMRC aren't the quickest at keeping everything up-to-date.
 

mattclarkie

Distinguished Member
I was told the interest is only meant to accrue whilst you are earning enough to pay it back (with the exception of while you are studying).
At least that is what I was told when I applied for them, but reading the direct.gov site it says they accrue until paid off. So I don't know what is true anymore.
 
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evilgenius

Active Member
Thats great thank you. One more thing. Recently I applied for a funded PhD. I think the funds equal to £12k-£13k per year, under the £15k threshold. Would I have to notify them about it if I was successful in obtaining the funded place?

I think the DEL award is non-taxable, well at least ive been told but its good to double check I suppose.
 

DPinBucks

Distinguished Member
Govt-approved awards for post-grad work are non-taxable.

As others have said, you pay off your student loan through PAYE. The SLC will have notified HMRC of your loan status, and repayments will automatically start as soon as you start to earn taxable income above the threshold. You don't need to notify anybody.

Interest on the balance of the loan accrues whether you are earning or not.
 

Steven

Senior Moderator
Retain all payslips and receipts for SLC repayments though because you hear all sorts of stories about SLC happily continuing to siphon your wages even when you have repaid the lot :p
 

mattclarkie

Distinguished Member
Also, if you have any savings earning interest these count towards your income. If you are earning over £15k you officially have to fill in a Self Assessment tax form declaring your interest which will then be used to calculate additional loan payments :facepalm:

I wonder how many people actually do this?
 

DPinBucks

Distinguished Member
Also, if you have any savings earning interest these count towards your income. If you are earning over £15k you officially have to fill in a Self Assessment tax form declaring your interest which will then be used to calculate additional loan payments :facepalm:

I wonder how many people actually do this?
Subject to correction, I don't think that's true.

Interest on most savings accounts is paid after tax is deducted at 20%, so you don't need to notify HMRC or fill in an assessment. Eg, if the interest before tax is £100, then the bank pays you £80 and HMRC gets the £20.

However, if you earn more than the 40% higher band (including this £100), then you do need to fill in a form. Also, if you earn below the 20% threshold, you can apply for the interest to be paid in full, without the deduction.

AFIK, you can't claim back tax overpaid through automatic deductions, so you need to be vigilant.
 

mattclarkie

Distinguished Member
We are talking Student Loan repayments which are 9% of all income over £15k (For the purpose of the next part).
For the purpose of a student loan savings interest is classified as income and your PAYE will not know about any private assets accruing income (shares, savings accounts), so these must be submitted separately as a Self Assessment.

They are unlikely to check because banks automatically take tax from interest if you haven't registered as tax exempt, but student loan repayment is separate from this taxation and you should be declaring it.


If you are subject to both PAYE and Self Assessment
You will be required to calculate any student loan repayments due through Self Assessment in addition to any repayments which are required through PAYE if you:
work as an employee and are also self employed
are subject to tax at a higher rate
have unearned income from stocks, shares and savings etc

http://www.direct.gov.uk/en/Educati...udentLoansCoursesStartingFrom1998/DG_10034870


Banks do also repay overpaid tax via automatic deductions (last year I was tax exempt but they took tax), but it depends on the bank how easy it is to get it back, so prevention is the safest thing to do.
 
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DPinBucks

Distinguished Member
We are talking Student Loan repayments which are 9% of all income over £15k (For the purpose of the next part).
For the purpose of a student loan savings interest is classified as income and your PAYE will not know about any private assets accruing income (shares, savings accounts), so these must be submitted separately as a Self Assessment.

They are unlikely to check because banks automatically take tax from interest if you haven't registered as tax exempt, but student loan is separate from this taxation.




Repaying student loans through PAYE (courses starting from 1998) : Directgov - Education and learning
That item is a bit misleading. The para you quote only applies if you are already subject to self-assessment, ie you meet one or more of the three qualifications listed (employed & self-employed; subject to higher rate tax; have unearned income). The unearned income bit only applies if you earn interest or didvidends which are not already tax-paid. If your income is well below the 40% threshold and all you have is a simple savings account paying interest after tax, then you do not need to do self-assessment, with or without a student loan. Otherwise about 80% of all taxpayers would have to also.

Both my daughters have student loans, and they are not subject to self-assessment.
 

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