If you took out a student loan while on a university or college course that began in September 1998 or after you will have an Income Contingent Loan.
There are two types of repayment plan for Income Contingent Loans; the one that applies to you depends on where and when you first began your studies.
- Plan 1: You will start to repay your loan from the April following the date you graduate or leave your course and will pay 9% of anything you earn over £16,910 before tax per year.
- Plan 2: You pay 9% of anything you earn over the threshold of £21,000 per year.
- Both plans:Repayments made from your income between £16,365 and £21,000 will be applied to your Plan 1 loan balance. Repayments from your income above the £21,000 threshold will be applied to your Plan 2 loan balance
- PAYE:Your employer will calculate and deduct student loan repayments from your pay. These deductions will be shown on your pay slip. On SimpleTax you can enter the deducted amount in the Expenses group of your Employment page.
- Self-Assessment:You will normally make student loan repayments in the tax year that begins after you graduate or leave your course , along with your Tax and NICs. SimpleTax will automatically take into consideration your student loans simply by you activating the following option in the check-out page.
How is it calculated?
According to HMRC's csl1 leaflet:
"You start by including all of the relevant income included in your annual return. This will include all self-employed profits, any employment income and any unearned income providing the unearned income is more than £2,000. If the sum of all your relevant income exceeds the annual threshold (£16,910), Student Loan repayments of 9% will be deducted on anything over the threshold and will be included in your Self Assessment tax bill."
After each payment, the Students Loans Company will send you a yearly Statement with your outstanding balance.
SLC and HMRC can only monitor your outstanding balance on an annual basis, rather than monthly, so it is possible you could repay more than is outstanding on your loan.You will be entitled to a refund if you overpay your loan and just need to contact HMRC or the Students Loans Company.
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