pre 1998 student loan deferment (salary sacrifice car?)

apug666

Hi,

I was wondering if there were any student loan experts out there that might be able to help me answer a couple of questions?

Firstly does a salary sacrifice car bring your gross income down in terms of having to repay your pre 1998 student loan. I am above the threshold and will have to start repaying my loan but if I got a salary sacrifice car from work then this would lower my gross earnings?

Secondly, how is the threshold calculated each year, as it appears to go up by I can't tell if this is based on rpi or some other rate?

Thanks for your help in advance, I need to work out my budgets for the next year or two and this would have a big effect.

Al

Blackbeard_of_Perranporth

SLC Website

If you have a Mortgage Style Loan and you have a gross monthly income of £2,398 or less (equivalent to £28,775 per year) you may be eligible to apply for deferment.

The website atates that this figure is before any deductions

http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,3867045&_dad=portal&_schema=PORTAL

apug666

Hi,

Yes it does say that but the salary sacrifice is taken before the gross salary is listed. My colleagues pay slip shows his gross salary sum as being reduced before reductions of tax, NI etc. The student loan site says it uses gross salary and his pay slip shows gross salary as being lower than it was before he got his car. It's confusing.

apug666

If I earned £2500 per month and a salary sacrifice car reduced my gross to £2250 a month then it would put me under the threshold again?

The student loan site says:

Your gross income is the amount you earn before any deductions (such as Income Tax or National Insurance) are taken from your pay.

But my payslip would actually state a lower gross pay amount before tax etc. Would this work?

thanks.

jcosta

I have successfully deferred my student loan for several years until this year. My reference salary is above the threshold but my various salary sacrifice items take it below the threshold. My company has recently chosen to show each salary sacrifice item separately as a negative allowance.

Having had my deferral denied this year, I have just had a lengthy conversation/argument with someone at SLC. They are defining gross pay as simply my salary before any deductions. They class the salary sacrifice items as 'deductions'. Therefore they are claiming that my headline salary is indeed my gross pay. They also said my deferral should have been denied in previous years but they weren't checking them properly.

Their definition of gross pay seems arbitrary to me. I pointed out to him the gross pay to date on the payslip which on a monthly basis is below the threshold but he said this was irrelevant. He also said taxable pay is irrelevant.

I'm intending to take this further with them. I think it will very much depend on what your company chooses to put on the payslip. Companies don't have to itemise salary sacrifice items but many choose to do so. I would actually suggest forgetting about payslips for the deferral and ask your company to do a letter showing your gross pay. Any payroller will define gross pay to be the pay before tax and NI, and that will be your agreed post-sacrifice salary.

anniecave

I would disagree with the post above.

I would say gross is always the amount before any deductions. Otherwise everyone could reduce their salary by paying into a pension and never pay off their student loan.

The letter I get from my employer confirms my gross salary and then also confirms a salary sacrifice lower amount as I (and my employer) pay into a pension. The letter also confirms that the original amount will be used for various purposes, including mortgage applications. Student Loan would also be based on the original amount.