Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.
Which student loans need to be repaid?
If you have received a tuition fee loan, a maintenance loan or a postgraduate loan, you will be expected to repay these loans – even if you do not finish your course.
If you have received any kind of bursary or grant, you wouldn’t normally be expected to repay these unless you had been paid too much.
How and when you repay your student loans depends on the repayment plan you are on. It will also depend on whether you are employed or self-employed. Make sure you keep your payslips and any P60s you receive as you may need them if you wish to claim a refund later.
When do you start and finish repaying your student loans?
This all depends on your repayment plan. The amounts you pay are subject to change each new tax year (beginning 6th April) and you will stop paying if your income drops below a certain threshold.
You will be on Plan 1 if you are an English or Welsh student who began your undergraduate course prior to 1st September 2012, or if you are a Scottish or Northern Irish student. On Plan 1, you will start to repay your loan in the April after you leave your course, as long as your income is above £352 per week (£1,527 per month) before tax and other deductions.
You will be on Plan 2 if you are an English or Welsh student who began your undergraduate course on or after 1st September 2012. The earliest you will start to repay your loans is once your income is over £480 per week (£2,083 per month) before tax and other deductions.
The earliest an English or Welsh student with a Postgraduate Master’s Loan will start to repay is when your income is over £404 per week (£1,750 per month) before tax and other deductions, and it will be the first April after you leave your course. The earliest an English or Welsh student with a Postgraduate Doctoral Loan will start to repay is when your income is over £404 per week (£1,750 per month) before tax and other deductions, and it will be the first April after you leave your course or the April 4 years after the course started.
For Scottish and Northern Irish postgraduate students, you will repay postgraduate loans under Plan 1.
How much do you have to pay?
How much you pay will depend on the plan you are on. Each plan has a threshold – 9% of the amount you earn over the threshold for Plans 1 and 2 and 6% of the amount you earn over the threshold for postgraduate loans.
If you have a plan 1 or 2 loan AND a postgraduate loan, that threshold rises to 15%.
You do not repay anything if your income is below the threshold.
Interest will be added from when you get your first payment.
There is no penalty for early repayment of student loans.
How do you repay your Student Loans?
Your repayments will automatically be taken from your salary (just like your tax and National Insurance contributions) if you are an employee. Your payslips will show your repayments.
If you are self-employed, HMRC will work out your repayments when you submit your Self Assessment tax return and you will make them at the same time that you pay your tax bill.
If your employer goes into liquidation, you will need to send your P60 and/or payslips to HMRC to prove how much you have paid. If you do not have this information, you may be required to contact the liquidator to obtain this information from the payroll records.
You can check your repayments and remaining balance by checking the annual statements you receive from the Student Loan Company or by checking online if you have an online registration with the Student Loan Company (this is not the same as your Government Gateway account).
Can you get a refund if you think your income was below the threshold?
Yes, you can apply for a refund of your repayments if your total annual income in a tax year was below the following:
- £18,330 a year for Plan 1
- £25,000 a year for Plan 2
- £21,000 a year for a Postgraduate Loan.
Your employer may still deduct repayments if your annual salary is below this but you get paid a bonus or overtime which takes you above the threshold.
You can also apply for a refund if you have repaid in full.
You need to wait until after 5th April to apply for a refund so that the Student Loan Company can see what your total income is for that year. You will need to send proof of income, such as payslips.
Updating Your Employment Details
If you need to update your employment details, the Student Loan Company will inform you by letter or email. You may even have to do this even if you are already paying your loan back through your salary.
You might be subject to a higher rate of interest if you fail to update your details so it is really important to make sure you respond to any correspondence from the Student Loan Company.
How can DSR Tax Claims help?
We know that dealing with student loans can be a complicated affair, even with our helpful guide to tell you everything you might need to know. It’s all very well reading about it and knowing what HMRC’s stand on it is – but how do you apply that to your own circumstances? It can seem like an absolute minefield but help is always available and you don’t need to battle through this alone. Our team of experts at DSR Tax Claims are always on hand to help our clients and act as their tax agent and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.