Self assessment form can't account for student loan ending in same year

lightbeans

Hi guys, looking for a little advice please.

I have just filed my online tax return for 09/10, because I was both employed and self employed that year.

I had a student loan but it got paid off in the summer of 2009, so the student loans company stopped taking money from me at that time. That meant I paid about £1500 to my student loan in that year, but I'd have paid about £3500 if it hadn't ended (eg if I'd had to keep paying it all year).

When you fill out the tax return online you have to state how much you paid towards your student loan. So I put £1500.

The tax return isn't aware that the loan is paid up, so it calculates that I should have paid £3500, so it wants me to pay the extra £2000. I phoned the self assessment helpline today and they confirmed this is the policy - they want me to pay £2k and they say that eventually the system will be updated with the fact that I've overpaid and it'll be refunded to me.

Obviously I told them that I wasn't paying £2k just to have it refunded at some point in the future, all because their form can't accept that the loan is paid off. A manager is ringing me back on Monday.

There must be stacks of students who pay off their loan whilst under self assessment - is this really the policy?!

Tarasam

This is the policy and it affects quite a few.

Mikeyorks

lightbeans wrote: »

There must be stacks of students who pay off their loan whilst under self assessment - is this really the policy?!

There's a number of anomalies with SLC repayments via PAYE and SA - this is just one of them. It mainly arises from the fact SLC was shoehorned into broad brush systems and SLC are only updated annually. All 'students' in the last couple of years of the loan should opt for the DD system offered now by SLC .... it's about the only way you can terminate the loan accurately and without overpayment.

I'm assuming you have a final SLC statement from circa Sept 2010 showing you've completed? In which case the circumvention is to uncheck the SLC box at Box 1 of the Student Loan repayment on page TR 2 of the SA100? And then check the overall computation is the same other than the SLC demanded? If not or there's some cross field checking that doesn't like that - then also remove the £1500 at box 2.

I don't see any 'dishonesty' in unchecking Box 1. The way it's phrased ...... you'd be checking it for evermore if you ever had a Student Loan!

Pennywise

I've had quite a few clients where this has happened. What I've done is unticked the "are you liable for student loans" box and also removed the amount of student loans deducted, so the tax return is completed as if the student loan never existed which results in the right tax.

Then I put a note in the "other information" box with details of the student loan deductions and dues, showing that it's paid up. Never had any come back from HMRC and it seems to be the only way to deal with it.

If HMRC can't make their forms fit the circumstances, then you have to do what it takes to make the circumstances fit the forms - if that means ignoring boxes and putting details in the "other information" box instead, that's what you have to do. You've made full disclosure and your tax is right, so you can't be liable for penalties etc.

lightbeans

On my final submission I had unticked the student loan box and then had to remove the amount I'd paid, and that put everything right (but felt dishonest). I'll go back and add a note to confirm what I've done.

Yes I have a competition statement from SLC from about Sept 2009.

Thanks for the quick replies