Student Loan Overpayment....Maybe...

Alan85

Good Morning Everyone

I was hoping we could get some advice from people who are more well versed in the intricasses of student loan repayment. 

Looking at the 23/24 tax year, the overpayment threshold for the year is £22015, and £1834 monthly. 

My partner was on maternity leave during this financial year for 3 months (running over from 22/23 financial year), and returned to work in July 23. An incentive provided by her company was a 3 month bonus payment to return to work after 9 months maternity leave. This was paid a long with her normal monthly payment, which obviously sent her considerably over the monthly limit.  

Her annual salary was £19300, until Jan 24, which then improved to £23400 and due to maternity, bonus payment, and a backdated payment by her company during September and October 23 due to wrong maternity pay during 22/23 tax year, worked out at £23579 for the tax year, and took her over the annual threshold. 


This is £1564 over the threshold for repayment, and as such 9% repayment would be £140.76.  Yet due to the one significant payment during the year, which included 4 months payment in one, she's paid £452 back.  Which equates to 28.9% of her salary over the annual threshold.  

Surely this is wrong? I've spoken to the student finance team over the phone, who are adamant it's correct, and that due to her salary being over the threshold she's not due a refund at all for that year, even though she paid 28.9% instead of 9%. 

Is this correct, and can someone with more knowledge and experience please give advice or shed some light into the matter.  Any information would be extremely gratefully recurved, and would like to thank you all in advance. 

Alan. 

silvercar

The student loan company are correct.

If you breach the annual threshold for any financial year, then any payments due by breaching the threshold in a particular month are non-refundable. 

If she hadn't breached the threshold for the year, she would have been entitled to a refund of payments taken.

Alan85

Thank you for the reply and information. 

This seems like a very unfortunate and calculated way of doing it.  So she's ended up paying 29% of her salary over the annual threshold instead of the stated 9% and they can get away with it. 

Fortunately when contacting them, they did find overpayments of £225 from 19/20, and 21/22. Which, looking at the their website, should have automatically refunded.  Would it be worth asking for the average interest over the 4/5 years that the overpayments would have accumulated to be added onto the refund, seen as it's from quite a while a go? 

Once again, thank you for advice and knowledge, it's very much appreciated.

Alan

silvercar

Alan85 said:

Thank you for the reply and information. 

This seems like a very unfortunate and calculated way of doing it.  So she's ended up paying 29% of her salary over the annual threshold instead of the stated 9% and they can get away with it. 

Fortunately when contacting them, they did find overpayments of £225 from 19/20, and 21/22. Which, looking at the their website, should have automatically refunded.  Would it be worth asking for the average interest over the 4/5 years that the overpayments would have accumulated to be added onto the refund, seen as it's from quite a while a go? 

Once again, thank you for advice and knowledge, it's very much appreciated.

Alan

If you could see this company, there are ways round it, but you need to forecast in advance the exact calculation. More of benefit for anyone reading than this case where it is too late, but speaking to the employer and asking to pay a bonus with April pay rather than earlier could help. Also any pension contributions made as salary sacrifice wouldn’t count, so a one off contribution to a pension could alleviate the problem.  

It’s only in recent months that you can request overpayments from earlier years online, so it wouldn’t have been automatic in the years in question. You won’t get interest paid to you, in effect you have gained in that by overpaying you haven’t been charged in interest on those amounts. 

jonickson

Hi. I'm in a similar situation for a different reason - I left my employment before the end of the tax year and did not work again in that tax year. My total income was over the annual threshold, but I paid more than the 9% because PAYE uses the monthly thresholds for the calculations.
If this is the rule it is very unfair.
Equally, it means that employed and self-employed people are being treated differently because the latter are always assessed using the annual threshold through the self-assessment system. This also seems unfair.
Is there any recourse at all?

silvercar

jonickson said:

Hi. I'm in a similar situation for a different reason - I left my employment before the end of the tax year and did not work again in that tax year. My total income was over the annual threshold, but I paid more than the 9% because PAYE uses the monthly thresholds for the calculations.
If this is the rule it is very unfair.
Equally, it means that employed and self-employed people are being treated differently because the latter are always assessed using the annual threshold through the self-assessment system. This also seems unfair.
Is there any recourse at all?

Nothing you can do about it. As you say, if you are over the monthly threshold you pay that month. If you are over the annual threshold you can’t get a refund.