Student Loan calculations not annualised or eligble for refund?

T3_PR0

Hi all,

I am plan 2 and over the past few years I have been just above the 27k payment threshold.

As far as I can tell, student loan repayments are calculated on a month to month basis. 

This has meant that in my early career, when I was under the limit for 11 out of 12 months, but then got made redundant and received extra pay I essentially paid 14% for the year on eligble earnings (breakdown below)

22/23 Actual

11 Months - £2,166.66 (not eligible for student loan repayment)
1 Month £5,556.66 (paid £296 AKA 9% for the month)
Total £29,399.92
Threshold £27,295.00
Eligible income £2104.02 (9% of this is £189)
= 14% contribution on eligible income

Where as if I earnt the same salary but paid monthly without the 5k redundancy payment

12 Months X £2,449.99 = £29,339.92
Eligible Monthly earning = £175.41 SL Paid £15.79 AKA 9%

Total SL paid £189.48 (12 x £15.79)

The system punishes just being over threshold with varying salary. 

In my new role, I am regularly doing overtime and received a backdated pay award where I now find myself being shafted on how this is calculated. 

I have done the math's myself and double checked it with a MSE calculator and can see that every year I am overpaying by 1 to 200 pounds and there is nothing I can do about it as I am above the threshold limit. 

This seems entirely wrong and I would like to know if there is anything that can be done about it.

silvercar

It is a known issue and it is the way that student loan repayments are calculated. If you were under the annual threshold for a tax year, you could reclaim everything you have paid. Once over the loan threshold, even by £1, any monthly payments made are not refundable.

Ed-1

T3_PR0 said:

Hi all,

I am plan 2 and over the past few years I have been just above the 27k payment threshold.

As far as I can tell, student loan repayments are calculated on a month to month basis. 

This has meant that in my early career, when I was under the limit for 11 out of 12 months, but then got made redundant and received extra pay I essentially paid 14% for the year on eligble earnings (breakdown below)

22/23 Actual

11 Months - £2,166.66 (not eligible for student loan repayment)
1 Month £5,556.66 (paid £296 AKA 9% for the month)
Total £29,399.92
Threshold £27,295.00
Eligible income £2104.02 (9% of this is £189)
= 14% contribution on eligible income

Where as if I earnt the same salary but paid monthly without the 5k redundancy payment

12 Months X £2,449.99 = £29,339.92
Eligible Monthly earning = £175.41 SL Paid £15.79 AKA 9%

Total SL paid £189.48 (12 x £15.79)

The system punishes just being over threshold with varying salary. 

In my new role, I am regularly doing overtime and received a backdated pay award where I now find myself being shafted on how this is calculated. 

I have done the math's myself and double checked it with a MSE calculator and can see that every year I am overpaying by 1 to 200 pounds and there is nothing I can do about it as I am above the threshold limit. 

This seems entirely wrong and I would like to know if there is anything that can be done about it.

You'll be hit the same way with National Insurance Contributions which are calculated in the same pay period way as student loan deductions (and you can't even get NICs refunded if you earn below the annual threshold).