Student loan repayments - multiple jobs.

JonnyH2

Hi,
Just a quick query..

Is it correct that if someone has multiple jobs (all PAYE, therefore no self assessment) and doesn't earn above the monthly repayment threshold of £1615 (Plan 1) at any one of those jobs, yet overall earns above the annual threshold of £19,390 (Plan 1) then they'll never make any repayments?.. 

Is that right? Seems like an odd anomaly...

Thanks for any help!
  

[Deleted User]

Not an anomaly at all - your employer is responsible for deducting 9% from your salary above the repayment threshold.

If they don't pay you above the threshold, then you don't have deductions. It's literally that straight forward. It doesn't matter of you have 4 employers paying you £15k each or 20 paying you. As long as it's under the repayment threshold, then you don't repay.

Be aware though, if you ever complete a tax return in this situation, HMRC will invoice you directly for the amount you were liable to repay.

JonnyH2

SFSLExpert said:

Not an anomaly at all - your employer is responsible for deducting 9% from your salary above the repayment threshold.

If they don't pay you above the threshold, then you don't have deductions. It's literally that straight forward. It doesn't matter of you have 4 employers paying you £15k each or 20 paying you. As long as it's under the repayment threshold, then you don't repay.

Be aware though, if you ever complete a tax return in this situation, HMRC will invoice you directly for the amount you were liable to repay.

Thanks for the reply.

So if you had 4 PAYE jobs earning £15k each, but had to do a tax return for say £1000 of unearned income that year, you'd suddenly be liable for £3744 each year in loan repayments?

Is that right?..

Thanks for your help.

MalMonroe

 JonnyH2 said:

Hi,
Just a quick query..

Is it correct that if someone has multiple jobs (all PAYE, therefore no self assessment) and doesn't earn above the monthly repayment threshold of £1615 (Plan 1) at any one of those jobs, yet overall earns above the annual threshold of £19,390 (Plan 1) then they'll never make any repayments?.. 

Is that right? Seems like an odd anomaly...

Thanks for any help!
  

No. With a Plan 1 loan you’ll pay it back when you earn OVER £19,390 a year, £1,615 a month or £372 a week.

So if you earn LESS than £19,390 per year, you won't repay anything. 

Did you see Martin Lewis's show on Thursday? There was a large section on student loans and it's on Youtube, with no ads and is very informative . . . https://www.youtube.com/watch?v=0PMtSZ5RKBI

This link also contains everything you need to know :  https://www.ucas.com/ucas/conservatoires/finance-and-support/undergraduate-tuition-fees-and-student-loans/repaying-your

And if UCAS doesn't know, nobody does!   

JonnyH2

MalMonroe said:

 JonnyH2 said:

Hi,
Just a quick query..

Is it correct that if someone has multiple jobs (all PAYE, therefore no self assessment) and doesn't earn above the monthly repayment threshold of £1615 (Plan 1) at any one of those jobs, yet overall earns above the annual threshold of £19,390 (Plan 1) then they'll never make any repayments?.. 

Is that right? Seems like an odd anomaly...

Thanks for any help!
  

No. With a Plan 1 loan you’ll pay it back when you earn OVER £19,390 a year, £1,615 a month or £372 a week.

So if you earn LESS than £19,390 per year, you won't repay anything. 

Did you see Martin Lewis's show on Thursday? There was a large section on student loans and it's on Youtube, with no ads and is very informative . . . https://www.youtube.com/watch?v=0PMtSZ5RKBI

This link also contains everything you need to know :  https://www.ucas.com/ucas/conservatoires/finance-and-support/undergraduate-tuition-fees-and-student-loans/repaying-your

And if UCAS doesn't know, nobody does!   

Thanks for the reply.

I understand how the threshold works if you have one job, one salary, paying one income. But if you have multiple jobs (that are PAYE, not self-assessed) and don't earn above £1615 per month (Plan 1) at any of them - then you don't pay anything back at all. Just seems really strange.. For example someone could earn £60,000 a year from 4 different jobs and not have to pay anything back at all...

I realise this affects probably 1% of people with student loans, but it's really interesting nonetheless..

MalMonroe

I don't think you have quite got it.

You will pay back your loan based on your combined ANNUAL INCOME. From every single source. So if you are lucky enough to be earning £60k per annum, you will also be repaying your loan. Everything and anything you earn, from however many jobs you may have, under whatever system (PAYE and self-employed) you will start repaying your loan when your income reaches £19,390 per year and above.

Say you do have four jobs and each pays £15k pa. When your total income is calculated it will be £60,000 and you will begin to pay your student loan at 9%.  Because you would be earning way over the threshold of £19,390.

Say you have six jobs and each pays £4.5 p.a. You will not start to repay your student loan because your total income is below the threshold of £19,390.

In each case, you will still be liable for income tax. But only in one case will you be liable to repay the student loan. 

Anyone earning £60k per year will definitely have to repay their loan at 9% interest. I don't understand what you don't understand. Just because someone's income may be split into several jobs does not mean they will not be liable to repay the student loan. It's the JOINT income that's calculated. Not individual incomes. 

It would be very interesting indeed if high earners got away without repaying their student loan but they don't.

I know these things because I had a student loan myself a few years ago. Plan 1.

JonnyH2

MalMonroe said:

I don't think you have quite got it.

You will pay back your loan based on your combined ANNUAL INCOME. From every single source. So if you are lucky enough to be earning £60k per annum, you will also be repaying your loan. Everything and anything you earn, from however many jobs you may have, under whatever system (PAYE and self-employed) you will start repaying your loan when your income reaches £19,390 per year and above.

Say you do have four jobs and each pays £15k pa. When your total income is calculated it will be £60,000 and you will begin to pay your student loan at 9%.  Because you would be earning way over the threshold of £19,390.

Say you have six jobs and each pays £4.5 p.a. You will not start to repay your student loan because your total income is below the threshold of £19,390.

In each case, you will still be liable for income tax. But only in one case will you be liable to repay the student loan. 

Anyone earning £60k per year will definitely have to repay their loan at 9% interest. I don't understand what you don't understand. Just because someone's income may be split into several jobs does not mean they will not be liable to repay the student loan. It's the JOINT income that's calculated. Not individual incomes. 

It would be very interesting indeed if high earners got away without repaying their student loan but they don't.

I know these things because I had a student loan myself a few years ago. Plan 1.

I understand I may be missing something very basic here - and apologies if I am - but I'm genuinely not sure what you're suggesting here is correct.. 

It doesn't seem to be treated in the same combined annual manner as income tax for PAYE employees.

It seems to me that student loan repayments (if PAYE) are based on MONTHLY income from each employer, and not even combined monthly income. Say again, for example, someone has 4 separate jobs earning £72,000 a year in total, all PAYE, not self-assessed, being paid £1500 a month each (under the Plan 1 threshold). Because the MONTHLY £1615 threshold hasn't been reached at any of their jobs - no repayment is made.

You're suggesting this is wrong? I am happy to be corrected! As you say I may not have got it.

Ed-1

MalMonroe said:

I don't think you have quite got it.

You will pay back your loan based on your combined ANNUAL INCOME.

This isn't right.

The rules are based on National Insurance rules as it's a contributory system, rather than income tax rules. The only time total combined income is looked at is if a self-assessment is required for some other reason.

https://www.gov.uk/repaying-your-student-loan/what-you-pay

If you have 2 or more jobs

If you’re employed, your repayments will be taken out of your salary. The repayments will be from the jobs where you earn over the minimum amount, not your combined income.

Example

You have a Plan 1 loan.

You have 2 jobs, both paying you a regular monthly wage. Before tax and other deductions, you earn £1,000 a month from one job and £800 a month for the other.

You will not have to make repayments because neither salary is above the £1,615 a month threshold.

Example

You have a Plan 2 loan.

You have 2 jobs, both paying you a regular monthly wage. Before tax and other deductions, you earn £2,300 a month from one job and £500 a month for the other.

You will only make repayments on the income from the job that pays you £2,300 a month because it’s above the £2,214 threshold.

JonnyH2

Ed-1 said:

MalMonroe said:

I don't think you have quite got it.

You will pay back your loan based on your combined ANNUAL INCOME.

This isn't right.

The rules are based on National Insurance rules as it's a contributory system, rather than income tax rules. The only time total combined income is looked at is if a self-assessment is required for some other reason.

https://www.gov.uk/repaying-your-student-loan/what-you-pay

If you have 2 or more jobs

If you’re employed, your repayments will be taken out of your salary. The repayments will be from the jobs where you earn over the minimum amount, not your combined income.

Example

You have a Plan 1 loan.

You have 2 jobs, both paying you a regular monthly wage. Before tax and other deductions, you earn £1,000 a month from one job and £800 a month for the other.

You will not have to make repayments because neither salary is above the £1,615 a month threshold.

Example

You have a Plan 2 loan.

You have 2 jobs, both paying you a regular monthly wage. Before tax and other deductions, you earn £2,300 a month from one job and £500 a month for the other.

You will only make repayments on the income from the job that pays you £2,300 a month because it’s above the £2,214 threshold.

Thank you. Yes this is as I thought.

Still seems like an odd anomaly to me - admittedly that only affects a tiny group of people - but interesting nonetheless..

taxangel_2

This is what it says on the Government website , with two examples,
which can be found at gov.uk/ repaying-your-student-loan/ what-you-pay (As I'm new here I can't post links yet, so type that into your search without the spaces).

I've copied and pasted the exact text, and underlined the pertinent points, so hope that is of help:

If you have more than one job

You’ll only make repayments from jobs where you’re paid over the threshold for your plan type, not your combined income.

Example

You have a Plan 1 loan and you have 2 jobs. Before tax and other deductions, you’re paid £1,000 a month from one job and £800 a month for the other.

You will not have to make repayments because neither salary is above the £2,082 a month threshold.

Example

You have a Plan 2 loan and you have 2 jobs. Before tax and other deductions, you’re paid £2,300 a month from one job and £500 a month for the other.

You will only make repayments on the income from the job that pays you £2,300 a month because it’s above the £2,274 threshold.

silvercar

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