Are you up to speed with Student Loan Repayments and Self-Assessment?
So you finished your degree, celebrated your graduation and embarked on the biggest adventure yet…running your own business or becoming a company director but have you forgotten something?
May I remind you? Student Loan Repayments!
When completing a personal tax return the Self Employed and Directors often overlook their Student Loan Repayments.
New clients have turned to us in blind panic when they believed they’d carefully filled out their personal tax return form only to discover they missed the Student Loan Repayments and are now facing the wrath of HMRC.
People can find themselves owing thousands of pounds because they forgot that the dividends from the business can push their gross income above the Student Loan Repayment threshold or they simply haven’t paid the correct Student Loan repayment amounts for years.
Late or unpaid Student Loan repayment amounts are dealt with by HMRC the same way as late or unpaid income tax – by charging interest and penalties for mistakes.
HMRC announced Student Loan threshold increases to £17,335
At the start of the 2015/16 tax year the revised threshold of £17,335 before tax came into force for anyone that graduated last year or before.
In real terms you must now be earning £333.37 a week (£1444.58 per month) before you start repaying the loan or have an equivalent monthly income in a mix of dividends and salary for example.
The threshold amount can change each year but HMRC confirmed it will stay the same for 2016/17 tax year.
How do you know how much you have to repay each month?
The student loan repayment amount rises in line with your salary and/or overall gross income but the table below will guide you based on a range of income.
|Income each year before tax
|Up to £17,335
Our advice to you
Our advice to you is keep very detailed records. Retain your payslips from previous jobs to help assess how much of your student loan you’ve already repaid.
Secondly, if you take a career break, become unemployed or head overseas always keep HMRC and Student Loans Company informed of any changes.
Finally, it’s never too early to speak to an expert, but it can be too late.
Remember the next key date for Self-Assessment is 31 of July 2015. Are you ready?
Contact Bruce Wilson for advice on 0141 290 0262 or or connect via LinkedIn or Twitter.