Student loan repayment when self employed.

piemandan

Hello,

I am just looking for a little confirmation on my student loan repayments. I left university in 2010.

I am now self employed since June 2018, having been in full time employment since August 2013. Previous to that, I worked abroad.

I have a Plan 1 student loan and I believe that after my self assessment is complete anything over £15,000 will be charged at 9% in order to fulfill the payments to the SLC.

Does anyone have any information on whether they want this as a lump sum or can it be spread? Or is that a question I would need to raise with them?

Thanks in advance.
Dan.

DrEskimo

You will repay it in one lump sum when you file your self assessment tax return.

It is 9% for anything earned over £18,330.

As with income tax and National Insurnace, it’s your responsibility to put aside the amount each month to be able to pay the self assessment bill by January 31st.

http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,6678530&_dad=portal&_schema=PORTAL

piemandan

Thanks for the reply.



I graduated in 2010, so my earning threshold was £15,000 before I pay it back so I was going off that figure rather than the current £18,330.


I currently put 30% of my pay to savings once I get an invoice paid, so I think this should be OK to cover all bases.

DrEskimo

The threshold applies to all people with a plan 1 loan for this financial year. It’s not based on the year of graduation. So £18,330 is the threshold you need to calculate it on (although basing it on £15k won’t hurt, as you will just find your bill is lower by about £300!).

30% is about right, but it may be a little higher depending on your national insurance contributions. Also of course will be higher if you reach the higher rate tax threshold.

I’m both full time and self-employed, so I just keep a spreadsheet of my earnings and it works out the tax, NI and student loan payments on a rolling basis.

If you think your earnings will be stable and consistent, I think there are ways to pay monthly so that may be worth looking into.

piemandan

Ah excellent - I totally misread that then, I'm glad it is slightly higher!

In that case, I think for a couple of invoices every few months I'll put 40% away just to be on the safe side. I have heard some horror stories about self assessment and I'd rather have too much put aside than not enough.

I think once I get into the swing of things everything should fall into place.

Paying it monthly might not be for me, some months are extremely busy whilst others slow down a little.

I work in Live Events so it's hard to predict sometimes.

DrEskimo

piemandan wrote: »

Ah excellent - I totally misread that then, I'm glad it is slightly higher!

In that case, I think for a couple of invoices every few months I'll put 40% away just to be on the safe side. I have heard some horror stories about self assessment and I'd rather have too much put aside than not enough.

I think once I get into the swing of things everything should fall into place.

Paying it monthly might not be for me, some months are extremely busy whilst others slow down a little.

I work in Live Events so it's hard to predict sometimes.

As you will have 2months this financial year where you were employed, it may be worth using this calculator to help estimate your tax bill each year.

https://www.employedandselfemployed.co.uk/tax-calculator

piemandan

Thanks for this, I'll have a look.