Old mortgage style loan repayment threshold

Jezzabell

Hi, I've searched, but can't seem to find the answer so sorry if this has been answered elsewhere.

Does anyone know if the gross salary repayment threshold for old style mortgage student loan of £27,813 is before or after any salary sacrifice such as childcare vouchers?

My salary is due to increase by 1percent which will take me just over the threshold for loan repayment so I can no longer defer. My employer runs a childcare voucher scheme where I can buy up to £243 pcm of vouchers from my gross salary. If I do this will it reduce my gross salary for student loan repayment purposes. I'm aware I'll have to pay it back at some point, but one more year will be soo helpful as we hope to be debt free by this time next year after we sell our house.

Thanks.

Jezzabell

Anyone know the answer to this please. I've just got my deferment forms through for next year and want to know if it's worthwhile taking out the childcare vouchers now.

Thanks

Fire_Fox

As I read it it is gross income, so before any deductions. Doesn't salary sacrifice simply reduce your taxable income? Have you considered contacting SLC?
http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,3866794&_dad=portal&_schema=PORTAL

atypical

Jezzabell wrote: »

Anyone know the answer to this please. I've just got my deferment forms through for next year and want to know if it's worthwhile taking out the childcare vouchers now.

Salary sacrifice reduces your gross salary which is what student loan repayments are based on. Your student loan repayments will therefore reduce.

jonboysez

I would also like to know the answer to this question - I know salary sacrifice will reduce income threshold for the newer style Income Contingent type student loans, but will it also work on the older style Mortgage type loans like the original contributor wanted an answer to?

Dunroamin

I thought that was answered in the post above yours.

jonboysez

No it doesn't make clear that it applies to the old style mortgage type loans - the contributor might not be aware that there were 2 types of student loans with totally different rules for repayment - the later "income contingent" type loans definitely are affected by any contributions into a pension scheme because they are shown on information sent to HMRC - no information is sent to HMRC with the old style loans - repayments are done bank to bank via a direct debit

jonboysez

"Gross" salary usually means before any deductions - it might depend on what's shown on your wage slip, as to verify your income for the old style loans you have to send them 3 wage slips - would be better if you can just show gross after the deduction for pension contributions or childcare vouchers (i.e. start with the reduced figure without showing the above deductions so no-one looking at it can tell that its been reduced) - but don't know if that would be allowed?

Poolie

jonboysez wrote: »

"Gross" salary usually means before any deductions - it might depend on what's shown on your wage slip, as to verify your income for the old style loans you have to send them 3 wage slips - would be better if you can just show gross after the deduction for pension contributions or childcare vouchers (i.e. start with the reduced figure without showing the above deductions so no-one looking at it can tell that its been reduced) - but don't know if that would be allowed?

No Student Loans will look for the Gross figures when calculating the deferment as they are used to pension and childcare voucher deductions being listed.

jonboysez

Poolie are you saying that pension contributions will be allowed to reduce income for old style loans or are you suggesting they will take the figure before the deduction if its shown on the wage slip in full?

jonboysez

Just to be clear on this, and we are talking old style mortgage type loans here (not income contingent loans) - are you suggesting that future wages rises that would put you over the threshold can be offset by ever incresing payments into a pension fund via salary scarifice or the new automatic enrollment pensions coming to everyones employer?