Self-employed on the side and student loan

[GoosFraba]

Hello.

I'm in the process of filling my self-assessment form, and have come across a section that's confusing me a little bit.

My situation is that I'm in full-time employment, and doing some freelance on the side.

One of the questions on the self-assessment form is:
"Did you repay or were you due to repay a Student Loan or Postgraduate Loan?"

I'm still paying my student loan through my full-time employment. So initially I thought to answer Yes to the above, and included the deductions taken by my employer in the form (taken from P60 form). What this seems to do, however, is add the student loan deductions as chargeable income, which is increasing the total tax I'm due to pay. This is quite confusing to me. Why am I paying self-assessment tax on my student loan deductions through PAYE? For example before being self-employed on the side I wasn't paying extra tax on my student loan deductions, so I'm a bit confused why being self-employed makes a difference. Unless I'm meant to answer No to that question?

Thanks.

 

[GoosFraba]

A sub-question on the form says:
"Did you receive notification from the Student Loans Company that repayment of an Income Contingent Loan began before 6 April 2024?"

But I haven't received such notification. Additionally, my student loan is due to be repaid fully this month as well.

 

[David Griffiths]

You are not paying self assessment tax on your student loan. The extra amount is your student loan repayment due for the year which just happens to be collected with you SA tax liability. That;s essentially the same as any student loan repayment collected via employment along with your PAYE due. In both cases the amounts (eventually) find their way to the Student Loan Company and reduce your debt.

Make sure that the amount deducted by your employer is shown on your tax form - if you don't do that the system will probably calculate your full repayment due for the year, without taking account of what's already paid. That can be painful!

 

[GoosFraba]

You are not paying self assessment tax on your student loan. The extra amount is your student loan repayment due for the year which just happens to be collected with you SA tax liability. That;s essentially the same as any student loan repayment collected via employment along with your PAYE due. In both cases the amounts (eventually) find their way to the Student Loan Company and reduce your debt.

Make sure that the amount deducted by your employer is shown on your tax form - if you don't do that the system will probably calculate your full repayment due for the year, without taking account of what's already paid. That can be painful!

Thanks @David Griffiths .

That's the strange thing, I've included the amount deducted by my employer in the tax form (taken from my P60 for year ending April 2024), but then the student loan repayment amount shown on the tax form is £2,309.00, whereas my student loan balance as of April 2024 was less than £1000.

Is it best to answer No to that question and contact student finance? As I said my loan will be repaid fully this month as well.

 

[StevensOnln1]

If you're close to the end of repaying your student loan, you may find that you end up overpaying as HMRC don't know what your remaining balance is and the Student Loans Company don't know how much has been collected until after the end of the tax year. You claim a overpayment once the SLC update your account (not sure if they refund automatically).

 

[IanSuth]

If you're close to the end of repaying your student loan, you may find that you end up overpaying as HMRC don't know what your remaining balance is and the Student Loans Company don't know how much has been collected until after the end of the tax year. You claim a overpayment once the SLC update your account (not sure if they refund automatically).

Not only do they not repay automatically they are notoriously hard to get any overpaid money back from or to get even an agreed amount with - for ages they actually had no facility to repay overpaid amounts

It is usually better to contact them a bit ahead of time, ask for an agreed final payment amount for a set date. Get that, go to your employers payroll and show them so they stop auto deductions, then pay the stated amount manually

 

[David Griffiths]

If you are getting close to settling the loan (possible a year or two ahead), the SLC will often contact you abouy making direct payments to them rather than deductions through payroll. That should stop any overpayments.

However, showing your payroll department correspondence will not work. Any instruction to start or stop student loan deductions must come from HMRC.

 

[IanSuth]

If you are getting close to settling the loan (possible a year or two ahead), the SLC will often contact you abouy making direct payments to them rather than deductions through payroll. That should stop any overpayments.

However, showing your payroll department correspondence will not work. Any instruction to start or stop student loan deductions must come from HMRC.

Know a couple of people where they left it to sort itself out, the notification from hmrc was delayed and payroll continued deducting for 2 or 3 months after loan was repaid which then took well over a year to reclaim

 

[GoosFraba]

Yeah I got a letter from SLC a while back asking me to use DD to avoid overpaying. I've been paying through DD last number of months, and this month will be the final payment. So as far as I can tell I shouldn't have to pay any student loan payments through self assessment. My gut feeling is to answer No to the mentioned question and contact SLC.

 

[David Griffiths]

I think that you can safely answer No as you are not required to make payments via HMRC because you have a direct arrangement with the SLC