Student loan overpayment PAYE

Buzz70

I was made redundant in November 2020 and received 12 weeks payment in lieu + outstanding annual leave entitlement, in addition to a small redundancy payment. I paid student loan contribution on the PIL and annual leave element at the correct rate for Scotland (Plan 1) in that month (and each month prior). However, I was then out of work until March this year, and my new salary is slightly lower than my previous one. Adding up my total student loan repayment as a percentage of my salary as at 5th April 2021, I have overpaid to the tune of around £500. I asked SLC about a refund and they say I’m not entitled to one as the deduction for the month I was paid additional salary was correct (in that month). This doesn’t seem right. HMRC will give me a tax rebate for overpaid tax based on my full year earnings. The SL repayment threshold is given as an annual figure so common sense would dictate that earnings and repayments are calculated annually too? Just for clarification, I do and have always earned over the threshold, so the scenarios given by Martin elsewhere on the site don’t apply exactly to my situation. 

Ed-1

Buzz70 said:

I was made redundant in November 2020 and received 12 weeks payment in lieu + outstanding annual leave entitlement, in addition to a small redundancy payment. I paid student loan contribution on the PIL and annual leave element at the correct rate for Scotland (Plan 1) in that month (and each month prior). However, I was then out of work until March this year, and my new salary is slightly lower than my previous one. Adding up my total student loan repayment as a percentage of my salary as at 5th April 2021, I have overpaid to the tune of around £500. I asked SLC about a refund and they say I’m not entitled to one as the deduction for the month I was paid additional salary was correct (in that month). This doesn’t seem right. HMRC will give me a tax rebate for overpaid tax based on my full year earnings. The SL repayment threshold is given as an annual figure so common sense would dictate that earnings and repayments are calculated annually too? Just for clarification, I do and have always earned over the threshold, so the scenarios given by Martin elsewhere on the site don’t apply exactly to my situation. 

SLC are correct. Whereas income tax works on total income for the year, student loan repayments mirror national insurance contributions which are based on pay period thresholds and are only deducted based on any earnings above the pay period threshold for each job so you can even earn below the pay period threshold in multiple jobs but have total income way above the annual threshold without having to make any national insurance or student loan repayments at all. The only time you can get a refund is if annual income is below the annual threshold.