Tax return and Student Loan repayment

MrMagic

I'm presently filling in my UK tax return and I got a nasty surprise.

For context, I have a full time job as an employeee, but over the last few years I have a local stall, (very low turnover) selling collectable items

I paid off my student loan via a lump sum in late April 2024, so only £146 was taken from my pay during that tax year (all the rest was paid off by May).

My tax return asks whether i had a student loan during that tax year. I answered "yes", because that was true at the start of the tax year. Then I declared the £146 taken via my wages. The system proceeded to calculate that I owe £1500+ in student loan fees.

Apparently there is no seperate box to state that my loan was paid off, so I have to pay them £1500 apparently. Its definitely the student loan doing it, as if I eliminate that section as a test that amount disappears from the calculation.

The joke here is I moved house during the year and cut my selling, so didn't even quite hit the £1000 allowance threshold. I shouldn't be paying anything!

Has anyone experienced this or aware of a solution?

Dead_keen

Change your tax return to "No" and then in the white space say "On [xx April 2024] I repaid my student loan in full".

MrMagic

Thanks for you advice. I'm a little apprehensive about the system flagging a concern, but perhaps it the only way. 

Strummer22

Happened to me, after some comms with both HMRC and SLC (neither of whom had a clue and told me talk to the other) I did as Dead_keen advised, and never heard anything further. That was in 2022.

LITRG

Hi MrMagic 
We have information on our website about paying off your student loan before filing your self assessment tax return which you may find useful: https://www.litrg.org.uk/tax-nic/student-finance-and-tax-system/student-loan-repayments/self-assessment-student-loan-repayments#7 
Hope this is helpful. 

Strummer22

LITRG said:

Hi MrMagic 
We have information on our website about paying off your student loan before filing your self assessment tax return which you may find useful: https://www.litrg.org.uk/tax-nic/student-finance-and-tax-system/student-loan-repayments/self-assessment-student-loan-repayments#7 
Hope this is helpful. 

I do wonder why it's up to a charity to provide this information.

The self-assessment form simply asks: 
"If you’ve received notification from Student Loans Company that your repayment of an Income Contingent Loan was due before 6 April 2025, put ‘X’ in the box. We’ll use your plan and or loan type to calculate amounts due"

On a literal reading of this question I should put an X in the box even though I paid of my loan a few years ago - after all, it was before 6 April 2025 that I got notification that my repayment was due! The guidance notes and linked gov.uk pages don't give any of the useful information provided on LITRG's page.

sheramber

Strummer22 said:

LITRG said:

Hi MrMagic 
We have information on our website about paying off your student loan before filing your self assessment tax return which you may find useful: https://www.litrg.org.uk/tax-nic/student-finance-and-tax-system/student-loan-repayments/self-assessment-student-loan-repayments#7 
Hope this is helpful. 

I do wonder why it's up to a charity to provide this information.

The self-assessment form simply asks: 
"If you’ve received notification from Student Loans Company that your repayment of an Income Contingent Loan was due before 6 April 2025, put ‘X’ in the box. We’ll use your plan and or loan type to calculate amounts due"

On a literal reading of this question I should put an X in the box even though I paid of my loan a few years ago - after all, it was before 6 April 2025 that I got notification that my repayment was due! The guidance notes and linked gov.uk pages don't give any of the useful information provided on LITRG's page.

https://www.gov.uk/guidance/tell-hmrc-about-a-student-loan-in-your-tax-return

Information on your loan or plan type is supplied to HMRC by the SLC.

The SLC will not tell HMRC your loan balance, but they will tell HMRC if you have:

• repaid your loan in full
• been charged more than you owe

HMRC will take action to reduce or remove your Self Assessment student or postgraduate loan deductions so you do not pay back too much.

Strummer22

Better not be charged more than you owe in the first place, right?

HMRC won't have a clue if you've switched to paying the last bit of your loan by direct debit instead of it being deducted from your salary. They will see that you still owed loan repayments during the most recent tax year and were eligible to repay, but no payments are showing. Yes, it may well get resolved months or more than a year later, but in the interim you're out of pocket!