How do changes to quarterly self employment tax rtrns effect student loan repayments?

KG

Does anyone know how new quarterly tax submission requirements for self employed people will affect student loan payments?

I work part time and I also freelance part time. My freelancing comes in fits and starts. For example, a current 4 month project is worth about £5k, but this will be the main chunk of my freelance work this year.

I am a little worried that, if I enter a quarterly return that shows the income from my part time job (c. £11.5k /year and I pay tax via PAYE) and a £5k lump sum for freelancing, a wildly incorrect assumption will be made that I will earn around £15-20k freelancing (it's more like £7k)

2017/18 will be the first year where I may have to repay some of my student loan - I am in Scotland and have been told the threshold for repayment is around £17k. I understand that I currently just pay anything I owe at the end of the financial year, based on my tax return.

It has only just occurred to me that this change might cause a major pain when it comes to Student Loan repayments, and I wondered if anyone knows anything about this?

Thanks

K

Pennywise

The quarterly returns mean nothing. You can put any old figures in there. It's the final end of year return that will determine your tax, nic and student loan repayments, just as it is today. No payments are required during the year and HMRC claim that they have no plans to change that, so your example of peaks and troughs will not actually lead to any payments - it's the last one that matters. Of course, everyone expects HMRC to change their mind once the system is up and running and move onto quarterly payments, but that will be a few years off. But MTD isn't even law yet, and has been a right dog's breakfast so far, so may not come in next year, if at all. At the moment, no-one knows for sure if any when it will happen, what information they'll want and when, nor how it will impact payments required.

KG

Great - thanks Pennywise

chrismac1

Even when it is up and running, simply use MTU for the quarterly updates - Making Tax Up. That way it does not trigger off any issues in the database, whilst complying with whatever the filing requirement is that they finally decide on - if indeed it ever becomes law which is now very doubtful.