Exemption of Student Loan for Chemistry Teacher

letter

my daughter earned £23,000 as a Chemistry teacher last year but does not need to pay any loan repayments even if she reached the threshold as they currently have an exemption.  She also earned £23,000 as a self employed tutor which they have charged her student loan repayment on £18,000 of it.  Surely if Chemistry teachers are in essence exempt, her salary should not be included in the calculation to pay back the loan.... confused ??

silvercar

The rules are here: https://www.gov.uk/guidance/teachers-claim-back-your-student-loan-repayments

if eligible, and it does depend on where you teach as well as the subject, you can reclaim repayments made for the years listed on that page. It does say “ The amount we pay you is based on the amount you repaid to the Student Loans Company through Pay As You Earn (PAYE) while employed as a teacher.”, the key is “while employed as a teacher” so income from being self employed as a private tutor would not be the same imho.

ArbitraryRandom

silvercar said:

 ...so income from being self employed as a private tutor would not be the same imho.

I don't think that's what the OP was suggesting? 

To my reading, what they're saying is that they have an 'allowance' of £27k, and a total income of £46k - but the £23k earned as a chemistry teacher should be disregarded (due to the exemption), therefore their qualifying income was under the threshold and they should not have been eligible to repay anything for the year. 

I don't know if it's correct or not, but it sounds logical. 

silvercar

The way this is structured is that the slc takes payments as normal and then the ex-student applies for a refund of what they have paid. I suspect the refunding officials are looking at the teacher income and calculating it is under the threshold, so no repayments would have been made on the teacher part of her income, so they aren’t offering a repayment.

The words say they only repay what was paid as a PAYE deduction while employed as a teacher, so she would need to persuade hmrc to deduct the slc repayments from her PAYE. That may be possible if her other income was also PAYE, I don’t know if it is possible to use the allowance against self employment and then have a full loan repayment on your PAYE ie get the threshold applied to your self employment income.  I don’t know if there is a mechanism for that.

letter

Thank you for your help but it seems impossible to find the answer even Student Finance England and HMRC didn't seem to know.  HMRC claimed her Student Loans through her self assessment based on her earning of £46,000 minus the £27,000 threshold, so it was applied to the £19,000 .  Seems like you are treated differently if you are self employed as opposed to having 2 salaried jobs, surely this cannot be right.

silvercar

letter said:

Thank you for your help but it seems impossible to find the answer even Student Finance England and HMRC didn't seem to know.  HMRC claimed her Student Loans through her self assessment based on her earning of £46,000 minus the £27,000 threshold, so it was applied to the £19,000 .  Seems like you are treated differently if you are self employed as opposed to having 2 salaried jobs, surely this cannot be right.

I can’t see it as anything to do with student finance. It is a refund administered by the government on payments made to student finance. I don’t think it is being treated differently because of the self employment. If she had 2 paye jobs, would she be eligible? If the first job was not the teaching job and had her “below the threshold money” set against that then arguably the second (teaching) job would be nearly all above the threshold and eligible for the refund. But the system is designed for people who go into teaching as an encouragement to do so and to stick with teaching in the prescribed subjects in the set areas of the UK where presumably it is difficult to recruit. So it is natural for the presumption to be that the first job, where the threshold is applied, is the teaching post. 

The only way I can see a bigger refund would be if she earned all the income from the teaching job, but the scheme is limited to 10 years, because salaries are likely to be lower at the start of a career, so it won’t cost the government that much.

letter

It just seems wrong that she is getting absolutely no benefit from this scheme being a science teacher for over 50% of the working week (which is a requirement) 

This is from the GOV.uk website

If you have more than one job

You’ll only make repayments from jobs where you’re paid over the threshold for your plan type, not your combined income.

Example

You have a Plan 1 loan and you have 2 jobs. Before tax and other deductions, you’re paid £1,000 a month from one job and £800 a month for the other.

You will not have to make repayments because neither salary is above the £1,834 a month threshold.

Example

You have a Plan 2 loan and you have 2 jobs. Before tax and other deductions, you’re paid £2,300 a month from one job and £500 a month for the other.

You will only make repayments on the income from the job that pays you £2,300 a month because it’s above the £2,274 threshold.

 

silvercar

If her second job is self employed, she should be paying tax herself through self assessment, who is the “they” that is taking a student loan repayment? 

silvercar

The answer may be to set up, or become part of an umbrella company, that “employs” her to provide tutoring. She could then ask hmrc to apply all her personal allowance to this employment rather than the school job. This would hopefully mean she would have all the threshold applied to the tutoring and pay student loan repayments to the teaching job, which she could then apply to be refunded under the scheme.