Expat Student Loan Issue

Maz63934

Hello,

I've recently been sent on expat by my employer to a country in the EU from the UK. During this period my salary is split so I get paid 25% in the UK and 75% in the host country.

The problem I am facing is that my employer covers my tax in the host country which is fairly hefty but this is reported on my UK salary as an "income" as they have to report my salary worldwide. My tax and NI is not affected as it is equalised by HYPO Tax and HYPO NI to ensure I pay the same as if I had stayed in the UK. However, my student loan repayments have increased nearly 10x to the point where it now makes my UK pay negative and I am slowly building up debt to my employer.

I have spoken to both my employer and SLC but both have said nothing can be done. Surely this can't be true as I'm now paying way more than I can afford to pay. Any advice?

NCC1701-A

Maz63934 said:

Hello,

I've recently been sent on expat by my employer to a country in the EU from the UK. During this period my salary is split so I get paid 25% in the UK and 75% in the host country.

The problem I am facing is that my employer covers my tax in the host country which is fairly hefty but this is reported on my UK salary as an "income" as they have to report my salary worldwide. My tax and NI is not affected as it is equalised by HYPO Tax and HYPO NI to ensure I pay the same as if I had stayed in the UK. However, my student loan repayments have increased nearly 10x to the point where it now makes my UK pay negative and I am slowly building up debt to my employer.

I have spoken to both my employer and SLC but both have said nothing can be done. Surely this can't be true as I'm now paying way more than I can afford to pay. Any advice?

Maybe I've misunderstood your post but are you getting your 75% pay tax free due to your employer covering your tax? If so, you are much better off financially and your student loan repayments will flex as your pay has increased. An accountant may be able to help you better.

Savvy_Sue

Also confused, but can student loans 'see' what is being paid in your host country? Or just the 25% you are paid in the UK?

I ask because one of my (completely) expat family says that they are quite resentful of the fact that their communications with SL say "if you don't tell us what you earn, we'll require £X from you." And £X is considerably less than what they have to pay based on what they actually earn. 

Grumpy_chap

The OP does seem to have had an increase in pay so this will result in higher SLC repayments.

Prior to the secondment, OP earned £100 all in the UK and all subject to UK tax.  Say 30% overall tax.  Take home £70.

The OP now earns £75 abroad, which is processed in a manner as to be tax free to the OP, which seems to work as £75 plus taxes.  The OP says a higher tax rate than UK, let's say 40%.  So, for the OP to take home £75, that is 60% of the overseas gross, so the gross is £125.

The OP also earns £25 as UK salary, which is subject to UK tax (still 30%) so take home £17.50.

That makes the overall position total gross earnings £125 (abroad) plus £25 UK = £150
Take home £75 (abroad) plus £17.50 (UK) = £92.50

There is likely a double-taxation treaty in place so the OP is not liable for employment taxes on that portion that has already been taxed abroad, but the SLC are seeing the new total gross at £150 rather than £100 and that higher figure then calculates the SLC that is payable.  
From the increased total take home £92.50 - £70 = £22.50 extra, the OP needs to assign some to meet the SLC payments.

That is how I understand what the OP has said and the example has many simplifications.
It is possible that I have totally misunderstood the OP's explanation of how the salary and tax is being treated.

silvercar

Maz63934 said:

Hello,

I've recently been sent on expat by my employer to a country in the EU from the UK. During this period my salary is split so I get paid 25% in the UK and 75% in the host country.

The problem I am facing is that my employer covers my tax in the host country which is fairly hefty but this is reported on my UK salary as an "income" as they have to report my salary worldwide. My tax and NI is not affected as it is equalised by HYPO Tax and HYPO NI to ensure I pay the same as if I had stayed in the UK. However, my student loan repayments have increased nearly 10x to the point where it now makes my UK pay negative and I am slowly building up debt to my employer.

I have spoken to both my employer and SLC but both have said nothing can be done. Surely this can't be true as I'm now paying way more than I can afford to pay. Any advice?

You could repay to your employer from your overseas earnings, you should still be better off. Marginal rate is 9% which is less than the tax gain.

silvercar

I will ask the forum team to move this to the student board; someone with similar experience may have suggestions.