Self Student Loan Contribution on earnings or income?

SilverSix

*Typo in title sorry*

Student Loan Contribution on earnings or income?

Hi,

I'll try and keep it brief!

I've registered for self assessment for the first time as I inherited and surrendered UK and offshore bonds. I have been filling out my return online. I was a little shocked when I got my calculation that I have a student loan repayment.

I pay my repayments through my employer via PAYE.

Perhaps in my naievity I thought that student loan repayments only come out of earnings through an employer and not overall income? however it would seem that these are classed as the same things by HMRC?

Thanks in advance,

Ben

Edit: Also if somebody could explain what 'plus first payment on account due for 2012-12' means?

This is the only year I expect to have to fill a return. Is this a prepayment for the following tax year?

ceeforcat

Student loan repayments on earned income only.
If you pay your student loan through PAYE, you should have no further liability - make sure that you enter the amount deducted under PAYE in the Student loans section of the return.

Payments on account - if your tax deducted at source is more than 80% of your total tax liability, you should not have payments on account for 2012/13- check your figures. If it transpires that you do you can claim to reduce them to NIL towards the end of the form.

SilverSix

Thanks for the reply.

Okay perhaps I have made an error somewhere on the form as the foreign income is being added to my pay from employers bumping up the total income received up. I have included the amount contributed to my student loan correctly.

http://www.hmrc.gov.uk/leaflets/csl1.pdf

This seems to suggest unearned income should also have 9% paid on it.

Start by including all of your relevant income in your annual return. This will include all selfemployed 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 is over the annual threshold of £15,795, Student Loan repayments will be due at a rate of 9% on anything over this amount and will be included in your SA tax bill. '

However the unearned income gained has been over a duration of 15 years. Is there any top slicing relief for student loans?

It might be worth noting the gain and subsequent unearned income exceeds the £2,000 allowance.