Old mortgage style loan repayment threshold

atypical

jonboysez wrote: »

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?

Pension contributions or childcare vouchers in themselves do not reduce student loan repayments (post-1998 loans) or affect whether you can defer (pre-1998 loans).

Salary sacrifice as a method of paying for pension contributions or childcare vouchers does as it reduces your gross salary.

jonboysez

Well I just hope you are right atypical - I'm hoping to draw income from a personal pension shortly which along with future wage rises will put me over the threshold before I reach 60 (when the loan would be written off) - hopefully I can offset my pension income if I pay into another pension through salary sacrifice when the time comes?

atypical

jonboysez wrote: »

Well I just hope you are right atypical - I'm hoping to draw income from a personal pension shortly which along with future wage rises will put me over the threshold before I reach 60 (when the loan would be written off) - hopefully I can offset my pension income if I pay into another pension through salary sacrifice when the time comes?

There are links here which confirm that, for post-1998 loans, student loan repayments reduce if you use salary sacrifice:
http://www2.le.ac.uk/offices/sports/documents/ssfaqv10.pdf
http://www.bakertilly.co.uk/publications/Salary-sacrifice-Give-up-pay-to-save-money.aspx

The definition of gross salary for pre-1998 loans should be no different. It's not really a case of definitions either. Salary sacrifice is exactly like what it sounds - you're sacrificing part of your salary. You can't call the amount that has been sacrified salary otherwise it wouldn't be salary sacrifice!

I would hope you'd call or write to the Student Loans Company either way to confirm and post here to let us know the outcome.

jonboysez

I take your point atypical but you are basing everything on how salary sacrifice applies to income contingent type loans and assuming, rightly or wrongly, the same will apply to mortgage type loans. The trouble is, as I see it, mortgage type loans are nothing to do with HMRC, they are like a pay-day loan where they can adopt any rules they want - somewhere the rules must be written down but I can't find them, and if a scenario arises that they haven't provided for, no doubt they can decide to their advantage. I also take your point about the definition "salary sacrifice" - you must be sacrificing pay or the definition doesn't hold up. As for phoning the SLC - I tried that recently to find out if pension received increases "income" for threshold purposes - the girl on the phone was clueless and had to ask someone else, came back with "if its taxable" then it must be included, she also had no idea of when the loan is written off (i.e. when I reach 60 in my case) - so I'm very reluctant to talk to someone again who has less idea than myself - it needs someone at the top to answer by the looks of it. I did come across another post where someone got a reply of what should be included in "income" for mortgage type loans:
Items to be included when calculating incomeSalaryOvertime Payment(s)Childcare Vouchers (Non-Taxable)AllowancesProfit sharePerformance Related PayHoliday PayPension PaymentsLuncheon VouchersSpecial/Additional Responsibility PaymentsFoster Carer's AllowanceBenefits (eg Child Benefit, Working Tax Credit, Children's Tax Credit ,Housing Benefit etc unless specifically classed as excluded on thereverse of the Deferment Application Form)Bonus## If Bonus is listed as Christmas or Annual; take 1/12th of the payment and add to each monthly payslip.If Bonus is Quarterly then take 1/3 rd of the payment and add to each monthItems to be excluded when calculating incomeArrears of Back pay (which cannot be allocated to a specific period)ExpensesMileageAny payment which is received and deducted in the same monthNon-Taxable Payments (although we do include pension payments andchildcare vouchers)GTC Payments (these are usually annual payments made to teachers tocover the cost of their teaching certificate) approx £40.00 at themoment.Please see the reverse of the Deferment Application forbenefits/payments which must be declared but will be excluded fromthe calculation of income eg War Pension, Long Term IncapacityBenefit, Employment and Support Allowance"

bowserthecat

Did we ever get to the bottom of this?

My loan is currently deferred until December but - due to the ridiculous and unexpectedly huge drop (in percentage terms) in the level of income required before the loan becomes repayable - I will have to start repaying my loan in December. I can ill afford to shell out the money right now (yes, yes, yes - I know what you'll say - "you completed your degree in the 90s, you've had lots of time to think about paying it back"), so I really need to know the answer to this question...

My pension is currently contributed to by salary sacrifice. In order to stay below the repayment threshold, I would like to increase my pension contribution by £20-£30 per month, which would keep me under the new repayment threshold, allowing me to defer another year. But ONLY if whoever grants deferment sees that my gross income is purely my salary before tax, not my overall wage including the salary sacrifice.

I tried phoning Honours Student Loans about this to confirm if salary sacrifice is included in 'gross income', but they couldn't answer, referring me to the Student Loans Company. SLC's switchboard - the only number I could call that didn't refer to income contingent loans these days - simply put me through to a recorded message, reeling off a list of numbers of providers they'd sold the loans to. Hence catch-22, in a loop, and nobody answering my important question (and, I think, quite deliberately so).

Can anyone offer a definitive answer to the question? I've already been restructuring existing debt and re-planning and forecasting finances in anticipation that I will have to repay, but I would much rather defer for another 12 months and give myself some breathing space if I can possibly do so.

Thanks in advance to anyone who can definitively confirm how mortgage style loans' income level is worked out, and more to the point, who is actually doing the calculations now; historically, it was always SLC, right up to the end of last year, yet from more recent threads, it looks like the purchasers of the debt are now more likely to be involved in such assessments...

Advisor1

The calculation is based on whatever your wage slip shows as the top level before any deduction. The reason they ask for 3 payslips is so they can average the salary out and refer to your deferment form for threshold amount as it can change

shelford1975

I posted a question about this yesterday but may have put it in the wrong part of the forum. I believe that it partially answers the OP's question but others may know differently.

As a noob I'm not allowed to post links but my question was called 'Student Loans: Salary sacrifice not taken into account?'

I'm just stunned that so many employers are operating under 'wrong' information... SLC seem to shift the goalposts every year