Reply to: Student loan repayments - divident

[cannon999]

Some very good advice here, thank you guys. Especially about repaying the last bit of the student loan (which won't happen for a while for me unfortunately ha!)

Cheers

[PerfectStorm]

Yup. On the self assessment form it's basically a yes/no box. So if you've earnt £100k but only owe £500 on your student loan, tough. Default is you'd make a repayment of ~£7k, then wait for HMRC to pay to SLC, SLC to calculate then partially repay to HMRC, then HMRC to repay to you.

Our view is as/when the balance gets low, give the SLC a call, find out the balance including interest to that day and clear it by phone debit card payment. That way next SA return you can honestly answer "no" you don't have a student loan.

That would've been a good way to do it. I instead 'ticked the box' and submitted before October so that HMRC would calculate the accurately remaining amount to close the loan.

This may surprise you - they didn't do anything

[MonkeysUncle]

Yup. On the self assessment form it's basically a yes/no box. So if you've earnt £100k but only owe £500 on your student loan, tough. Default is you'd make a repayment of ~£7k, then wait for HMRC to pay to SLC, SLC to calculate then partially repay to HMRC, then HMRC to repay to you.

Our view is as/when the balance gets low, give the SLC a call, find out the balance including interest to that day and clear it by phone debit card payment. That way next SA return you can honestly answer "no" you don't have a student loan.

+1. This
I have just finished paying off my student loan and the final amount i did by setting up a direct debit for the last 3 months (which ended this Oct). This way you dont overpay and have to go through the hassle of claiming it back.

[Maslins]

You can look forward to the point where you reach full repayment - whereby both the SLC and HMRC will behave as if this is the first time this has ever happened, and involves multiple phone calls in order to not overpay massively, and lots of to and fro over the final amount.

Yup. On the self assessment form it's basically a yes/no box. So if you've earnt £100k but only owe £500 on your student loan, tough. Default is you'd make a repayment of ~£7k, then wait for HMRC to pay to SLC, SLC to calculate then partially repay to HMRC, then HMRC to repay to you.

Our view is as/when the balance gets low, give the SLC a call, find out the balance including interest to that day and clear it by phone debit card payment. That way next SA return you can honestly answer "no" you don't have a student loan.

[PerfectStorm]

Paid annually here too - it's quite a lot!

You can look forward to the point where you reach full repayment - whereby both the SLC and HMRC will behave as if this is the first time this has ever happened, and involves multiple phone calls in order to not overpay massively, and lots of to and fro over the final amount.

[pr1]

I have read that article. I have also read a dozen of others. The information that I am finding is conflicting!

I guess what I am looking for here is for other people in similar circumstances to say what they are ACTUALLY doing.

I report all dividends I've paid myself on my self assessment and pay student loan contributions based on total income (salary+dividends) - on my "typical" contractor income, I end up paying around £2k in dividend tax and another £2.4k in student loan contribution per year - the latter essentially being millennial tax as punishment for not being born before the [late] 80s

Welcome to the club

[Lance]

I have read that article. I have also read a dozen of others. The information that I am finding is conflicting!

I guess what I am looking for here is for other people in similar circumstances to say what they are ACTUALLY doing.

Ahhh. You want someone to tell you that they're doing what you want to do.
Sorry not me either.


The article you linked doesn't conflict. That's an article for employers to use. That doesn't fit your situation.
Here's another article Limited Companies and Student Loan Repayments | Boox

[Maslins]

Dividends do indeed count. I imagine the confusion is that HMRC find out about dividends/salary in very different ways.

Salary is submitted monthly. Payroll makes no mention of dividends. Therefore if you're a typical contractor taking a salary of £702/month, even if you also get £100k/year in dividends, there will be no student loan deductions on a monthly basis via the payroll.

Independently of that you'll need to do a personal tax return. This will disclose all salary received and student loan contributions already paid (likely £nil), plus dividends received. The total income will then dictate what student loan repayments are required, and you can offset any already suffered via the payroll system (again likely £nil for a typical contractor).

[TheCyclingProgrammer]

Firstly it's dividend, not divident and secondly yes dividend payments do count when calculating your loan repayments. I know this because I do my wife's tax return and every year her combined salary + dividends take her over the repayment threshold and she has to make a payment via self assessment.

[cannon999]

The section of the 'Collection of Student Loan Manual' (CSLM) that you are looking at is for borrowers within PAYE, which doesn't apply to these circumstances. You need to look at section 19000 of the same manual.

CSLM19025 - Collection of Student Loans Manual - HMRC internal manual - GOV.UK states "However additional liability under SA may arise if...The borrower has other income, such as self employed profits or unearned income in excess of £2,000". Dividends are unearned income.

I see. Thank you.

[Alchemy Accountancy]

Can you make a comment on this please?

CSLM17055 - Collection of Student Loans Manual - HMRC internal manual - GOV.UK

The section of the 'Collection of Student Loan Manual' (CSLM) that you are looking at is for borrowers within PAYE, which doesn't apply to these circumstances. You need to look at section 19000 of the same manual.

CSLM19025 - Collection of Student Loans Manual - HMRC internal manual - GOV.UK states "However additional liability under SA may arise if...The borrower has other income, such as self employed profits or unearned income in excess of £2,000". Dividends are unearned income.

[cannon999]

I'd assume where it says no to dividends its assume low amounts a normal person would hold, not the amounts we use that make up most of our income.

I have read that article. I have also read a dozen of others. The information that I am finding is conflicting!

I guess what I am looking for here is for other people in similar circumstances to say what they are ACTUALLY doing.

[northernladuk]

I'd assume where it says no to dividends its assume low amounts a normal person would hold, not the amounts we use that make up most of our income.

[cannon999]

You will pay student loan repayments on your dividend income.

On your self-assessment tax return you will need to state that you are liable to make student loan repayments, and the amount payable will be calculated for you.

Can you make a comment on this please?

CSLM17055 - Collection of Student Loans Manual - HMRC internal manual - GOV.UK

[Alchemy Accountancy]

You will pay student loan repayments on your dividend income.

On your self-assessment tax return you will need to state that you are liable to make student loan repayments, and the amount payable will be calculated for you.