Workaround for botched HMRC student loan repayment calculations
HMRC systems cannot differentiate between certain types of income which could lead to an overpayment of student loan deductions. What’s the solution?
If you make student loan repayments and you’re also within the self-assessment regime, you’ll be aware that any student loan repayments due on additional (typically non-PAYE) income are calculated and collected via your tax return. This would ordinarily be straightforward, but HMRC has confirmed that, despite student loan deductions not being due on benefits-in-kind, its systems are incorrectly including such income in the calculations. This means that affected individuals will end up paying higher student loan payments than is necessary. Therefore, if you’re in self-assessment and you have payrolled benefits in kind, such as a company car or private medical insurance, you will need to follow HMRC's guidance to ensure the student loans figure is calculated correctly. The current workaround is in place until shortcomings in HMRC systems can be addressed.
Related Topics
-
What’s a trivial benefit worth to employers?
The tax and NI exemption for trivial benefits is much misunderstood, but nonetheless very useful to employers. When can you use it, what are its advantages and are there any pitfalls to watch out for?
-
Should you agree to your customer’s self-billing request?
A customer wants to adopt a self-billing system, meaning they will issue invoices on your behalf and charge VAT or otherwise. Can you refuse their request and what are the risks of accepting?
-
Travel expenses - exempt or not?
You have several employees who travel from home or their workplace in the course of doing their job. Naturally, you meet the cost of their travel but should you be deducting tax and NI from the payments, or are they exempt?