Student Loan Repayment Vs Lottery Win?

JakeHyde

Hey guys,

If you haven't been very successful in your career and haven't earned enough to qualify for mandatory Student Loan repayments.  But then one day you are lucky enough to win a semi-significant amount, and are just about able to live off interest for the time being.

Does the student loan company have any right to demand repayment?  I was guessing when self assessment time comes around, if your interest reaches a taxable threshold, am I right in thinking any repayments would be deducted at the point?

I'd be grateful for any advice

la531983

To be fair if I won a shed load of money I would be clearing the student loan straight off anyway! 

Jami74

la531983 said:

To be fair if I won a shed load of money I would be clearing the student loan straight off anyway! 

I suppose £500k would earn about £25k interest. My student loan is close to £90k so I wouldn't pay it off with a £500k win. I would for a £5million win though.

OP, I'm not sure the student loans company would know you've had a lottery win unless you tell them, so probably wouldn't make demands. 

JakeHyde

la531983 said:

To be fair if I won a shed load of money I would be clearing the student loan straight off anyway! 

Interest in a savings acc. is much higher than the interest on a student loan, at least thats what Uncle Martin told me. 🤣🙈

silvercar

Great dilemma to have!

I've asked the forum team to move this to the student board.

QrizB

JakeHyde said:

Does the student loan company have any right to demand repayment?  I was guessing when self assessment time comes around, if your interest reaches a taxable threshold, am I right in thinking any repayments would be deducted at the point?

See unearned income info here:

https://www.gov.uk/hmrc-internal-manuals/collection-of-student-loans-manual/cslm16035

silvercar

As lottery wins are not subject to NI contributions, they also won't be subject to student loan repayments.

la531983

JakeHyde said:

la531983 said:

To be fair if I won a shed load of money I would be clearing the student loan straight off anyway! 

Interest in a savings acc. is much higher than the interest on a student loan, at least thats what Uncle Martin told me. 🤣🙈

Well yes but if I quit work off the back of winning millions and I still had a student loan debt I morally wouldn't feel right leaving it outstanding.
I would pay the mortgage off so why not everything else? 

QrizB

silvercar said:

As lottery wins are not subject to NI contributions, they also won't be subject to student loan repayments.

@Silvercar but interest or investment income resulting from a lottery win might be subject to student loan repayments?

The HMRC manual seems to say that you're liable to make repayments if you submit a Self Assessment tax return, even if your income is unearned and not liable to NI:
https://www.gov.uk/hmrc-internal-manuals/collection-of-student-loans-manual/cslm16015 and following pages.

Or am I mis-reading it?

silvercar

QrizB said:

silvercar said:

As lottery wins are not subject to NI contributions, they also won't be subject to student loan repayments.

@Silvercar but interest or investment income resulting from a lottery win might be subject to student loan repayments?

The HMRC manual seems to say that you're liable to make repayments if you submit a Self Assessment tax return, even if your income is unearned and not liable to NI:
https://www.gov.uk/hmrc-internal-manuals/collection-of-student-loans-manual/cslm16015 and following pages.

Or am I mis-reading it?

Paging our resident expert @Ed-1. I thought a win wouldn't be subject to repayments as it wasn't earned, isn't subject to tax or NI. 

Grumpy_chap

I am not knowledgeable so only reading the links and comments from @QrizB and @silvercar.

Reading those sources, the win itself would appear not to be subject to SL deductions but the interest earned subsequently would appear to be subject to SL deductions.
AIUI, the win would not require the individual to complete SA but the subsequent interest income (unearned income) would require SA.  
The link provided appears to refer to SL deductions applying when unearned income exceeds £2k AND SA is required, which would be met in the case of living of interest / investment returns from the lottery win but not the actual win itself.