Student loan deductions not made

anotherpaul_2

My girlfriend had her student loan statement today and noticed that there were no payments on it. She has an income-contingent loan. Checking her payslips, her employer hasn't been deducting them. She earns over the threshold and should definitely be paying them, having graduated two years ago.

Doing a web search, it looks like this a fairly common problem. It's tempting to ignore it, since she's happy to not make payments and it sounds like a lot of hassle to sort out.

Does anyone have any experience of this? Presumably the worst case is that they could send a demand for payment for the amount that should have been paid? We calculate that she owes them about £300 for the last FY. This would have been the first year that payments were due.


Any advice / experiance anyone has on this would be appreciated.

(I searched the archive and didn't find anything definitive - sorry if I missed something I should have seen.)

CLAPTON

When she started her job, did she tick the box that said she has a student loan?
I would normally add a bit about the general morality of the issue but in current circumstances I'll not bother.

leiela

Im in exactly the same position, i graduated 2 years ago as well and so far other than the "annual" you owe us xXX amount no attempts have been made to take money. I thought it would come out of my salary automatically but thus far nothing?? i've been earning over the threshhold pretty much from graduation so im starting to wonder if i've missed something?

should i contact someone? not that i really want to make payments but im more concerned about them whacking my with a huge bill when they realise i havn't been paying.

Sol00

Normally when student loan deductions aren't taken it's due to it not being declared to the employer, as Clapton said.

Sol00

You need to speak to your employer as it's them that deduct the money from your salary and then forward it to the HMRC at the end of the year.

anotherpaul_2

CLAPTON wrote: »

When she started her job, did she tick the box that said she has a student loan?
I would normally add a bit about the general morality of the issue but in current circumstances I'll not bother.

Thanks Clapton

I'm sure that she did. One of her colleagues is in a similar position and has tried to sort it out but failed.

I agree on the morality issue - morally, she should sort it out. Especially considering that she'll probably never pay the loan off in full. But, it's tempting to use the money to pay other more demanding (and higher interest) debts.

anotherpaul_2

Sol00 wrote: »

You need to speak to your employer as it's them that deduct the money from your salary and then forward it to the HMRC at the end of the year.

I don't think it's as simple as that. The employer can only deduct what they have been instructed to deduct (as I know when I tried to sort out an underpayment on my income tax and ended up with an overpayment for a month).

Other people on the web have mentioned the employer, HMRC and the student loan company all passing the buck. I've not encountered anyone who says they actually managed to sort it out.

Sol00

I used to work for SLC so I know that they have nothing to do with it directly.

It's the employer who deduct student loans as they do tax and NI and at the end of the year it's passed to HMRC, who then forward the file to the SLC.

CLAPTON

Sol00 wrote: »

I used to work for SLC so I know that they have nothing to do with it directly.

It's the employer who deduct student loans as they do tax and NI and at the end of the year it's passed to HMRC, who then forward the file to the SLC.

Indeed so, but the employer needs to be instructed to make the deductions by the HMRC. (the employer can't just make deductions without HMRC instructions)
In theory it works like this; P46 has tick , goes to HMRC, then HMRC tells employer to deduct SLC payments if appropriate. HMRC receive information from SLC to say the person has a loan (NI number should link it all together).
If you're not on the HMRC radar (i.e. not working) then it's the SLC that contact you and ask what you're income is.

all rather complicated and often goes wrong

b3nton

I am in exactly the same situation.
Someone in the HR dept in my work approached me and asked me to get in touch with SLC as they should have been taking payments.

She would know, she deals with a lot of wages and it should be taken automatically.

Good luck!

anotherpaul_2

Ah, thinking about it again, she would have answered "no" to the question on the P46.
"If you left a course of Higher Education before last 6 April and received your first Student Loan instalment on or after 1 September 1998 and you have not fully repaid your Student Loan, enter 'X' in box D."

At the time she started, "no" was correct, but from April 6 2008, the answer would have been "yes" if she had been asked. Since she hasn't changed job, she hasn't been asked.

I guess she asks her employer / writes to HMRC to point this out? How's it supposed to be picked up? This muct be a very common occurance.

(It's all a bit moot, since she's probably going to become self-employed this FY and not earn over the threshold, so we'll reclaim any payments she makes anyway. She's taking a pay-cut becuase the self-emplyment is part of her long term career plans.)