Student loan repayment amounts

atlasmm

Hi, 

I have a Plan 2 student loan. As an NHS worker (who is also on the NHS bank as a secondary income sporadically) my pay can be up and down dependent on which shifts I work each month. 

As I understand it, at the end of the tax year if your total income over the course of the previous tax year is below the threshold, repayments are refunded. 

However, what I can’t see to find online is whether you can get a refund if your total income is above the threshold, but you’ve overpaid (e.g. total paid to student loan vs total income less the repayment threshold x 9%)

In addition, is there anyway to make SLC aware this is happening and ask them to reduce the deductions going forward, or is it always a retrospective thing which has to be done after the tax year?

Thanks

silvercar

Once you hit the threshold you can’t get a refund.

atlasmm

Hi,

Just to clarify, theoretically - you can earn £27,295 and aren’t required to pay anything and can get a refund. 

However if you earnt £27,296, with some month’s payslips being higher and resulting in a higher deduction, and some months being lower resulting in less/no deduction, you could end up repaying £100s in that tax year - however you can’t get any of that back, even though you should be liable to pay 9p (9% x (£27,296-£27,295)? 

Poorly designed system if so which punishes those with variable income - the most common probably being NHS workers. 

Thanks 

Ed-1

atlasmm said:

Hi,

Just to clarify, theoretically - you can earn £27,295 and aren’t required to pay anything and can get a refund. 

However if you earnt £27,296, with some month’s payslips being higher and resulting in a higher deduction, and some months being lower resulting in less/no deduction, you could end up repaying £100s in that tax year - however you can’t get any of that back, even though you should be liable to pay 9p (9% x (£27,296-£27,295)? 

Poorly designed system if so which punishes those with variable income - the most common probably being NHS workers. 

Thanks 

It works the same as National Insurance contributions.

You are liable to pay 9% of any earnings above the pay-period threshold. That is the monthly equivalent of the annual threshold if you get paid monthly. You are only liable to pay 9% over the annual threshold if you have to fill in a tax return for any reason (such as being self-employed).

You also get the benefit of a full threshold for each job you do. So if you earn below the threshold in 2 separate jobs, no repayment is required even if total earnings are above the threshold.

kaMelo

atlasmm said:

Poorly designed system if so which punishes those with variable income - the most common probably being NHS workers. 

Thanks 

People playing the "I work for the NHS" card, is this a thing now?
As above, the only time you'll receive a refund is if you fall below the annual earnings threshold entirely. Once above the threshold it works exactly like national insurance with deductions per pay period.

Ed-1 said:

You also get the benefit of a full threshold for each job you do. So if you earn below the threshold in 2 separate jobs, no repayment is required even if total earnings are above the threshold.

@Ed-1, That isn't necessarily the case. By having more than one contract with the same employer, such as the OP who has a main contract and bank contract with the same NHS trust, they use the aggregated earnings rules, as such the total earnings from both contracts are added together against a single earnings threshold, as are NI contributions too.

https://www.gov.uk/guidance/what-to-do-if-your-employee-has-more-than-1-job

Ed-1

kaMelo said:

atlasmm said:

Poorly designed system if so which punishes those with variable income - the most common probably being NHS workers. 

Thanks 

People playing the "I work for the NHS" card, is this a thing now?
As above, the only time you'll receive a refund is if you fall below the annual earnings threshold entirely. Once above the threshold it works exactly like national insurance with deductions per pay period.

Ed-1 said:

You also get the benefit of a full threshold for each job you do. So if you earn below the threshold in 2 separate jobs, no repayment is required even if total earnings are above the threshold.

@Ed-1, That isn't necessarily the case. By having more than one contract with the same employer, such as the OP who has a main contract and bank contract with the same NHS trust, they use the aggregated earnings rules, as such the total earnings from both contracts are added together against a single earnings threshold, as are NI contributions too.

https://www.gov.uk/guidance/what-to-do-if-your-employee-has-more-than-1-job

Yes I should have pointed out that it needs to be different employers to be treated separately.

atlasmm

Whilst I take your points, if I’ve understood you correctly, this makes the national insurance and student loan system poorly designed - in that you can earn just below the threshold and pay nothing, or you can earn just above and after these deductions, you end up with less take home pay than if you were earning less. 

And no, this is not ‘playing the NHS card’, this is mentioning the largest employer in the UK where variable pay is common so it’s the best example. 

Ed-1

atlasmm said:

Whilst I take your points, if I’ve understood you correctly, this makes the national insurance and student loan system poorly designed - in that you can earn just below the threshold and pay nothing, or you can earn just above and after these deductions, you end up with less take home pay than if you were earning less. 

And no, this is not ‘playing the NHS card’, this is mentioning the largest employer in the UK where variable pay is common so it’s the best example. 

I agree with you. Income tax works differently. It's always the total combined income that counts for income tax. NICs and student loans have more holes in than Swiss cheese. Unlike income tax, they can also be avoided or reduced through salary sacrifice arrangements, e.g. swapping salary for employer pension contributions, and NICs/student loans aren't taken on withdrawal from a pension but income tax is.

We should scrap NICs and student loans and merge into income tax with a graduate premium tax. But if course it'll never happen as having them separate makes them more hidden. If you had a 32% income tax basic rate there'd be uproar but that's effectively what we've already got.

silvercar

Ed-1 said:

atlasmm said:

Whilst I take your points, if I’ve understood you correctly, this makes the national insurance and student loan system poorly designed - in that you can earn just below the threshold and pay nothing, or you can earn just above and after these deductions, you end up with less take home pay than if you were earning less. 

And no, this is not ‘playing the NHS card’, this is mentioning the largest employer in the UK where variable pay is common so it’s the best example. 

I agree with you. Income tax works differently. It's always the total combined income that counts for income tax. NICs and student loans have more holes in than Swiss cheese. Unlike income tax, they can also be avoided or reduced through salary sacrifice arrangements, e.g. swapping salary for employer pension contributions, and NICs/student loans aren't taken on withdrawal from a pension but income tax is.

We should scrap NICs and student loans and merge into income tax with a graduate premium tax. But if course it'll never happen as having them separate makes them more hidden. If you had a 32% income tax basic rate there'd be uproar but that's effectively what we've already got.

Never happen because not all people go to university. Even having a different rate for those that have attended uni won’t work as some people will have cleared their loans from savings/ inheritance/ gifts etc and a small percent never enter the loan system.

kaMelo

Ed-1 said:

We should scrap NICs and student loans and merge into income tax with a graduate premium tax. But if course it'll never happen as having them separate makes them more hidden. If you had a 32% income tax basic rate there'd be uproar but that's effectively what we've already got.

Whilst in principle I agree as it would make the tax system far simpler, like @silvercar said it's never going to happen.
There are also technical reasons that make it difficult. The levels of NI contributions vary (Class 1 - 4) depending on income and employment type, NI record is used to determine qualification for contributory benefits such as JSA, ESA and state pension entitlement. Not to mention the loss of employers NI contributions unless replaced with some kind of employers tax. Pension income, currently not subject to NI but taxable, would be hit also. 
It's not impossible to do but would require wholesale changes to the tax system and the noise surrounding it would be deafening  

atlasmm said:

Whilst I take your points, if I’ve understood you correctly, this makes the national insurance and student loan system poorly designed - in that you can earn just below the threshold and pay nothing, or you can earn just above and after these deductions, you end up with less take home pay than if you were earning less. 

And no, this is not ‘playing the NHS card’, this is mentioning the largest employer in the UK where variable pay is common so it’s the best example. 

It is something I see more and more, usually the point the people are trying to make can be summed up as "I work for the NHS so I should get special treatment"  Frankly it pisses me off no end, especially when the people making the comments are not even clinical but administrative working office hours.
I appreciate that you were using the example that, due to how enhancements and bank work is paid, clinicians will have variable pay which can have an effect on things like NI and student loans. 

If it appeared I was having a dig, which I probably was, it was not my intention. For that I apologise.

If6was9

This is an interesting thread and does highlight some injustices in the system. 

Further to the fluctuations in pay, it can lead to unjust outcomes another way. I have a colleague who due to a mix up at HMRC and their employer, they were put on the wrong tax code. They were also paid their first 2 months in one payment, meaning SLC took 9% of all the 2nd months earnings, not just the wage above the threshold. Also they have been taxed more than they should have been for several more months. When that is refunded it will be through payroll meaning SLC will again take way more than if their payment had been correct each month (approx £100 extra more a month) meaning due to errors elsewhere, they're about £500 down on where they should be.

Is there no way of getting this refunded by SLC?