Pay Tax on Student Loan Direct Debit Payments

TripD

I'm lucky enough to be near repaying my student loan, but am struggling to find consistent information on the best way to finish payment.

At the moment I pay as part of my wages. Therefore I do not pay any tax on the student loan repayments. (For simplicity say I pay £200 a month and don't then don't pay 30% tax on this money)

Several guides suggest moving to direct debit payment towards the end to avoid over repaying.

However if do this, I'll have to pay the 30% income tax on the £200. Then, once in my account, I'll have to pay the full £200 to the SLC. Therefore the actual amount I'll have pay is closer to £260. This doesn't seem like such a great deal!

Talking to the SLC this does indeed seem to be the case, yet I've not seen this point of view on any online guide (including the MSE one).

Surely the best solution is to pay though my wages, but watch the payments like a hawk. Stopping them as soon as I get close to repayment and then only paying a small one off payment to end it? Hopefully < £100?

It seems weird that the guides don't discuss tax implications.

CLAPTON

TripD wrote: »

I'm lucky enough to be near repaying my student loan, but am struggling to find consistent information on the best way to finish payment.

At the moment I pay as part of my wages. Therefore I do not pay any tax on the student loan repayments. (For simplicity say I pay £200 a month and don't then don't pay 30% tax on this money)

Several guides suggest moving to direct debit payment towards the end to avoid over repaying.

However if do this, I'll have to pay the 30% income tax on the £200. Then, once in my account, I'll have to pay the full £200 to the SLC. Therefore the actual amount I'll have pay is closer to £260. This doesn't seem like such a great deal!

Talking to the SLC this does indeed seem to be the case, yet I've not seen this point of view on any online guide (including the MSE one).

Surely the best solution is to pay though my wages, but watch the payments like a hawk. Stopping them as soon as I get close to repayment and then only paying a small one off payment to end it? Hopefully < £100?

It seems weird that the guides don't discuss tax implications.

You are incorrect.

student loan comes out of taxed income, so it makes no difference whether you pay directly out of salary or by DD

and tax is 20% plus 12% NI
or
40% plus 2%
depending upon income.

TripD

Ah - that would explain the misunderstanding. Thanks