Wage Arrears - Student Loan overpayment

Luke.Coomber

My employer made a big error in my pay a few years ago.  I've recently realised this has lead to me repaying more student loan than I should have. 

My April 2020 payslip (which was included in my P60 for 20-21) had extra arrears payments of £2955.75 due to an error my employer had made.
Making up for massively underpaying me in Nov 2019 to Feb 2020. Therefore that £2955.75 income should have been spread over 4 months. 

This caused me a massive over-payment of student loans which caused me to be out of pocket for the sum of £405.

I spoke to the student loan company, they said the student loan repayment is calculated monthly and cannot be refunded as I exceeded the threshold for that year. (I only did because the arrears were received in April, I earned under the threshold and would not have paid any loans if I had received the pay as normal split across 4 months). 

Please help! Is my employer obligated to correct this. Can they contact HMRC and say the income was earned in the 4 months, rather than as a lump sum? 

I work for the NHS, so I imagine they'll correct the issue if they have to. Although only have they have to. 

silvercar

Was the annual threshold for student loans breached? If so then you can’t have a refund. If the threshold wasn’t reached then you should be able to get a refund, though dealing with the student loan company is painful.

Luke.Coomber

silvercar said:

Was the annual threshold for student loans breached? If so then you can’t have a refund. If the threshold wasn’t reached then you should be able to get a refund, though dealing with the student loan company is painful.

It was breached. But only because they paid me the arrears in a different tax year. And therefore artificially increased my salary one year by reducing it the year before. Which was completely due to their error.

biscan25

You won't get any joy from SLC. The employer should in theory have recalculated the amounts per tax year and updated HMRC accordingly so you pay the correct tax.
SLC don't give refunds if the correct position is that you would have paid anything in that tax year.

Are you likely to pay off your student loan in full? If so, you haven't really lost money, you've merely paid more off sooner.

Luke.Coomber

biscan25 said:

You won't get any joy from SLC. The employer should in theory have recalculated the amounts per tax year and updated HMRC accordingly so you pay the correct tax.
SLC don't give refunds if the correct position is that you would have paid anything in that tax year.

Are you likely to pay off your student loan in full? If so, you haven't really lost money, you've merely paid more off sooner.

I'm a public sector worker. Paying off the loan would be a miracle. In short, no. The payment is a complete waste to me. 

Can this be done retrospectively? If I ask the employer to contact HMRC?  

silvercar

If this is the fault of your company, you could ask them to compensate you. 

sheramber

There may be an option to request HMRC to reallocate the payment to the correct year , depending on what the mistake was, but it may be done on an annual basis. not on a monthly basis. 

Whether that would make any adjustment to the student loan deduction I donlt know.

Luke.Coomber

silvercar said:

If this is the fault of your company, you could ask them to compensate you. 

I doubt they will, outside legal action. But I will of course ask. Thanks for the advice

Luke.Coomber

sheramber said:

There may be an option to request HMRC to reallocate the payment to the correct year , depending on what the mistake was, but it may be done on an annual basis. not on a monthly basis. 

Whether that would make any adjustment to the student loan deduction I donlt know.

Even yearly, it would make a huge difference as it would then put me below the threshold. I'm holding out hope this is what they can do. 

If I have proof of the income in documentation, I can hopefully then go to the SLC with that proof. Thanks for the help. 

sheramber

As I said it will depend on why there were arrears. Reallocation does not apply in all cases

see  https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye70023

penners324

The only way it'll happen is getting the payroll run for each month that is wrong. Which is very unlikely