Tax relief on DD student loan payments?

Buckby

Being within 12 months of repayment and not wishing to overpay i have recently switched my loan repayments to DD from PAYE.

Probably due to a combination my own naivety, eagerness and lack of information i have now realised that by doing this i am going to be massively out of pocket.

My payments through PAYE were 170 per month and this is what i agreed as a DD for the next 9 months. I today check my payslip and notice that although i have earnt an 'extra' 170 this month i have also been taxed an additional 70, extrapolated over 9 months and i am going to be paying an additional 630 tax.

My question is...is there any tax relief/reclaimable on the DD that i am now paying rather than the PAYE contributions?

I think it is disgusting that the only reason i moved to a DD payment was to prevent overpayment (due to HMRC/SLC shonky systems) and it is potentially going to cost me 630 for the privilege. Also, although i should perhaps of thought the tax implications through before i made the switch, how they can advocate a process that will cost people more money without informing them of this is beyond me!

Apologies for the rant at the end but any help with my question will be very much appreciated.

single_lonely

Changing to DD when nearer to paying off is endorsed by MSE.
Maybe someone needs to check this as a matter of urgency.

amiehall

Changing the way you repay your student loan does not affect your tax bill. This is the first pay of the new tax year (most likely) maybe something separate has gone wrong with your tax code.

You never get tax relief on student loan repayments whether they're PAYE or DD.

The issue with your tax is completely removed from student loan payments and you should look into it seperately.

Buckby

Thanks amiehall

Are you saying that (ignoring tax issues) i should have seen the full 170 that i was paying as a student loan payment as an increase in my salary?

if that is the case i will speak with my pay roll department as something has clearly gone wrong.

Poolie

It all depends when the stop notification was received by your payroll department and where this fell in the payroll cycle for your employer.

Best to have a chat with your payroll department as they will be able to work it out and show how they reached their conclusion.

2019

Hi,

I am interested in this subject and would like to know the outcome of this as this is something that I wish to avoid.

I am still in Repayment (post 98) and have quite a few years (20) to go. (this is if I do not take any time off for children (likely) or Gov keep raising the threshold of repayment (likely) So I am not sure if this will ever affect me (will never pay it back).

From my knowledge, I dont think this is anything to do with a problem in Payroll as I thought Student Loan Repayments Via PAYE were taken before tax.

I thought it was more of a, we pay back 9% before our wages are taxed (such as child care schemes and additional pension payments) And of course when you come out of this repayment method (to DD in the last year as advised on MSE) you then end up paying tax/NI on the extra amount paid in your wages.

With this in mind, it is perhaps more beneficial to us to pay via your payslip rather than by DD in the last year and reclaim the overpayment at the end of the year (i.e. less interest on money in bank has been overpaid to SLC Vs additional tax and NI contributions) which you will be paying anyway once the loan is finished.

Also bear in mind, you should have come out with more money this April pay slip due to changes in personal allowence, however...as the tax threshold has gone up, and repayment threshold has gone up, my payment has come down by the grand whole sum of a £1. (therefore govt keeping us paying more - Grad tax !!!) And have you had a pay rise? this might acount for some of the changes in your pay?

Please can someone claify? Martin, check this out !!!

OP, even though I like to think of myself as being quite savvy on this sort of thing I think I too would have made this (possible) mistake, and thank you for your post.

I'm off to do some research...

2019

2019

The website is currently down... must of seen me coming !!!

The only non useful thing i've found is... Gov uk states
'If you’re an employee

Your employer will calculate your repayment and take it off your salary every month along with your tax. Check your pay slip to see how much has been taken to pay your student loan.'


So doesn't answer the question really. unless you take 'along with you tax' as being before tax I don't know.



2019

2019

HMRC...

'repayments are taken out of your wages at the same time as your tax and National Insurance (either each month or each week).'

Northwest Payroll Services (Dont know who they are just googled it and this came up

'Are student loans pre or post tax and NI »

Student loan repayment deductions are made from the net pay after tax and national insurance has been calculated and deducted but the calculation of the deduction is based on the gross pay (before tax and NI) for the pay period. No deduction will be made if the statutory threshold is not exceeded.'

2019

amiehall

2019 is correct. Repayment rate is calculated on gross pay but taken from net pay. You receive no tax relief on student loan repayments no matter how you pay them.

CLAPTON

whyever would you expect the tax payer to contribute to the repayment for a loan made to you by the taxpayer?