Student Loan Query

[rich2k]

Thank you both!!

This forum is excellent fair play!

[Clare@InTouch]

thanks clare

i just posted that mustve been at the same time as you editted

many thanks

I sensed that may have been the next question which was why I edited! Happy to help

[Nixon Williams]

So i take it Dividends would not be classed as unearned income?

Dividends ARE classed as unearned income and will be included in any calculation of a student loan repayment IF your unearned income (dividends, interest etc) are over £2,000

The calculation will be done when you prepare your tax return.

Alan

[rich2k]

thanks clare

i just posted that mustve been at the same time as you editted

many thanks

[rich2k]

For a normal employee any loan deductions are handled through PAYE via your tax code, assuming you earn enough to warrant repayment (over £15,000).

If you're completing a tax return then the return will take account of your PAYE and Dividends, and the student loan calculation DOES take account on unearned income if it exceeds £2,000. Have a read through here: http://www.hmrc.gov.uk/leaflets/csl1.pdf

How unearned income affects your SA calculation of Student Loan repayments

Unearned income is only taken into account in calculating your SA Student Loan
repayments if your total unearned income is over £2,000. If this is the case, the total
amount (including the initial £2,000) is included in the SA Student Loan calculation.
If your unearned income is not over £2,000 it is disregarded.

Thanks Clare

So i take it Dividends would not be classed as unearned income?

Contractor Tax Calculator - The UK's Most Powerful Contractor Calculator

the main thing that got me confused was using the above calculator it had me as owing student loan on dividends

[Clare@InTouch]

For a normal employee any loan deductions are handled through PAYE via your tax code, assuming you earn enough to warrant repayment (over £15,000).

If you're completing a tax return then the return will take account of your PAYE and Dividends, and the student loan calculation DOES take account on unearned income if it exceeds £2,000. Have a read through here: http://www.hmrc.gov.uk/leaflets/csl1.pdf

How unearned income affects your SA calculation of Student Loan repayments

Unearned income is only taken into account in calculating your SA Student Loan
repayments if your total unearned income is over £2,000. If this is the case, the total
amount (including the initial £2,000) is included in the SA Student Loan calculation.
If your unearned income is not over £2,000 it is disregarded.


Just to add - link to what HMRC see as unearned income: http://www.hmrc.gov.uk/manuals/rdrmmanual/rdrm10415.htm

Unearned income is any income that an individual has which is not a pension and has not been earned by them as an employee, by carrying out a profession or by running their own business. Although this list is not exhaustive, unearned income includes:

interest from bank and building society accounts
dividends on shares
interest on stocks
rental income received (unless the rental income is part of the income of a trading business).

[rich2k]

I wouldn't imagine so unless you are on a PAYE scheme within your own Ltd.

Saying that though, 1st thing I did when I started contracting was to pay it off(though it was only about 6k then)

I think im gonna pay it off as well, best get it out the way isnt it but will probably be later in the year after i will have to do my SA and accounts

[rich2k]

thanks for your responses,

Yes i will be paying myself by PAYE from the company? Would this make a difference?

Cheers

Rich

[Jeremiah@RHJAccountants]

Hi

You would not pay a student loan on your dividends.

You pay personal tax on the dividends you take from your company at 10% and 32 .5% if you are a higher rate tax payer.

Have a look at this if you want to know more about dividends

HM Revenue & Customs: Tax on UK dividends

Hope that helps

[MarillionFan]

Hi All,

I understand i would pay student loan on my paye but if this was underneath the threshold then nothing would be payable

I just wondered would i pay student loan on my dividends?

Many Thanks

I wouldn't imagine so unless you are on a PAYE scheme within your own Ltd.

Saying that though, 1st thing I did when I started contracting was to pay it off(though it was only about 6k then)

[rich2k]

Hi All,

I understand i would pay student loan on my paye but if this was underneath the threshold then nothing would be payable

I just wondered would i pay student loan on my dividends?

Many Thanks