Will HMRC allow monthly payments for student loan, less amount being paid through PAYE?

greensalad

My partner was working as a contractor up until the end of this financial year (he ended his contract on 20th March). He then moved to be a salaried employee starting on the 6th April.

He has just had his latest self assessment and owes £1,400 in income tax and £5,100 in student loan. 

The query we have is, will his PAYE contributions from April to now (£297 per month) for his salaried employment be deductable from the £5,100 owed to student loan? And as the bill is due in January will he be able to deduct £3,000 odd from that bill that has been paid over the course of this year? Or will he have to pay this in addition to the £5,100 owed.

And as a final question, if he cannot deduct the student loan paid over this year so far, will HMRC be likely to allow him to spread the cost of repaying it over 12 months?

We think the income tax portion of the money owed will be covered by surplus left in the business (after corporation tax and accounting expenses are paid out) so it's only the student loan portion we're unsure of.

Pennywise

Unless the £5,100 fully repays the student loan balance, then no, he'll continue to have the monthly student loan deductions on his current year wages as well.

greensalad

His outstanding student loan balance as of today is £6,250 so I'm guessing if the £5,100 bill has to be paid in January, when the balance will be only £4,765 then they will accept the cost to clear the balance rather than the full amount currently owed? Or will he still have to pay and then receive a rebate?

unholyangel

The tax & student loans due is from the 19/20 year. 

The tax & student loans being deducted now under PAYE are for the 20/21 year. So no, the contributions he's been paying since april aren't going to impact on what he owes under his self assessment. 

greensalad

Thanks, that's what we thought but just wanted to check.