Student Loan Repayments

Student loan repayments are payable to The Student Loan Company via HMRC. The loan repayments are collected as a deduction through a payroll scheme for employed individuals and through the self-assessment tax system.

As with other matters relating to HMRC, it is the responsibility of the taxpayer to ensure that the correct payments are made.

As an example of where things can go wrong, an individual could have two separate jobs ,each having an income below the threshold for the commencement of student loan repayments. In this case each employer would not deduct any student loan repayments, however the individual is required to make payments. If the individual in not registered for self- assessment, then it would be unlikely that they would be paying the correct amount of student loan repayments.

This relatively simple system has of course been complicated by the involvement of politicians.  From August 2023 there will be 5 different schemes in place for student loans, each having a different starting point in respect of income where loan repayments commence. The post graduate loan repayment contributions operates in addition to undergraduate loan repayments. This means that an individual may well be paying 15% (9%+6%) of their income above the relevant thresholds.

The repayment period for student loans is also dependent upon which loan scheme an individual falls under. The loans will be written off after 25, 30 or 40 years.

In summary, what should be a relatively simple system has been made more complicated than it needs to be.