Do you have a student loan but are not making loan repayments via your employer? Are your employment earnings less than £16,365 per annum from 6 April 2013 (£15,795 per annum from 6 April 2012) but savings income over £2,000 per annum? Are your self-employment earnings over £16,365 per annum from 6 April 2013 (£15,795 per annum previously)?
If so, your student loan repayments are calculated at the time you complete your self assessment tax return. You need to tick the relevant box on page 2 of your self assessment tax return and the student loan deductions are due by 31 January following the tax year along with your tax payment. If the relevant box is not completed then interest and penalties can arise from an incorrect return. The amount of student loan is calculated at 9% on relevant income above the starting limit above.
If you are employed with earning above the starting limit, £16,375, from 6 April 2013, then your employer should collect the repayments by deducting them from your salary each pay day. HMRC should tell your employer when to start the deductions from your pay and they will continue until HMRC notify your employer to stop.
Student loan repayments are due to start on 6 April after you leave your course and once your income exceeds the starting rate limit. You can also make voluntary payments to the Student Loan Company at any time and regardless of your income level.
The Student Loan Company is only notified once a year of the loan repayments you have made through the tax system. If you are within two years of repaying your outstanding balance, the Student Loan Company should write to you and give you the option to continue to repay the loan through direct debits direct to the Student Loan Company rather than through the tax system. If this option is taken it reduces the chances of the loan being overpaid through the tax system.
If the loan is overpaid then you will need to contact the Student Loan Company for a refund rather than HMRC or your employer. It is therefore important to retain records of the student loan repayments made through the tax system whether by self assessment or by deduction by your employer.
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