Student loan nearly repaid - self employed 6 January at 3:29PM in Student MoneySaving 3 replies 60 views

SensibleSarah

Hoping this is the best board rather than small biz as theres a bit of crossover?

I've tried looking on various sections of the gov site but can't seem to find an answer. 

I've nearly repaid my Plan 1 SL but am now self-employed as a sole trader (since mid 2021) and confused about how this will work because the loan is coming to an end. I'll be due to finish repaying with what I've earned during the current tax year, ending 5th April 2023, but as HMRC only updates SLC once a year and I assume the communciation probably isn't two-way, will HMRC assume that my loan will continue into the following tax year and set my payments on account to factor in payments that I won't actually need to make? 

Is there anything I can do to stop this happening? Bearing in mind that SLC haven't recieved my self-employed repayments for the 21/22 year yet because HMRC won't release the funds until after 31st Jan presumably, would I be better off just contacting SLC and paying off the balance now? Or would that mess up HMRC's system because they've already accounted for the 21/22 amount owed to SLC in my last self-assessment? 

I can just wait until presumably HMRC have released the money owed to SLC for the last tax year and then pay off the outstanding sum after that, but will that leave enough time to update on HMRC's systems by the time I do the next self-assessment? Bearing in mind I like to do my self assessment on 6th April but I can of course delay this if I need to, much as I'd hate it. Just wondered if anyone had any experience of this kind of situation and how quickly (or slowly) the communication happens between SLC and HMRC. 

Thanks!

SensibleSarah

As expected, no one had any ideas about my very niche question  
But just updating in case anyone searches for similiar info in the future. 

HMRC has just released the money from the 21/22 tax year to SLC in the last few days - so I have time to pay off my remaining balance before my next self-assessment return, even if I do it on 6th April - which is likely! This means that I can include on my tax return that I no longer have a student loan outstanding, so they shouldn't include that in my 22/23 calculation. 

It's a fairly clunky system though, I have to say. HMRC literally communicate once a year with SLC, and SLC have no idea when this will be (according to the member of staff that I spoke to about it). In the meantime, I'm being charged interest on a balance that I actually paid a big chunk off ages ago, which doesn't feel fair. But I'm just happy to have finally cleared it to be honest! 

Ed-1

SensibleSarah said:

As expected, no one had any ideas about my very niche question  
But just updating in case anyone searches for similiar info in the future. 

HMRC has just released the money from the 21/22 tax year to SLC in the last few days - so I have time to pay off my remaining balance before my next self-assessment return, even if I do it on 6th April - which is likely! This means that I can include on my tax return that I no longer have a student loan outstanding, so they shouldn't include that in my 22/23 calculation. 

It's a fairly clunky system though, I have to say. HMRC literally communicate once a year with SLC, and SLC have no idea when this will be (according to the member of staff that I spoke to about it). In the meantime, I'm being charged interest on a balance that I actually paid a big chunk off ages ago, which doesn't feel fair. But I'm just happy to have finally cleared it to be honest! 

The last bit is wrong. Interest isn't applied until repayments are known, at which point it's calculated as if repayments were received in equal installments throughout the year.

silvercar

When you are in the last year or 2 before you clear your loan, you can move from salary deductions to direct debit.