Student loan repayment and unearned income

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sunshine87
sunshine87 Posts: 5 Forumite
in Loans
Hi, I was hoping for some help as I'm very confused!

Since leaving university I have never had to pay back my loan as I have always worked in jobs below the threshold.

Last year I was fortunate enough to inherit some money that I used to buy an apartment, which I currently rent out.

During 2016, I spent some of the year renovating the apartment and the rest of the year travelling so I was not employed and lived off savings and the rent I received from the apartment.

My question is - I read that you have to make a student loan repayment if unearned income (I assume this is unearned income?) is above £2000 for the year. Will I have to pay this even though I earned no other money and the amount in rent is well below the £17000 income threshold (I'm on student loan plan 1).
Also, can I offset costs such as service charge and ground rent - its a leasehold property - against the rental income?

Thanks in advance for your help!

Lucy

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  • Ed-1
    Ed-1 Posts: 3,891 Forumite
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    sunshine87 wrote: »
    Hi, I was hoping for some help as I'm very confused!

    Since leaving university I have never had to pay back my loan as I have always worked in jobs below the threshold.

    Last year I was fortunate enough to inherit some money that I used to buy an apartment, which I currently rent out.

    During 2016, I spent some of the year renovating the apartment and the rest of the year travelling so I was not employed and lived off savings and the rent I received from the apartment.

    My question is - I read that you have to make a student loan repayment if unearned income (I assume this is unearned income?) is above £2000 for the year. Will I have to pay this even though I earned no other money and the amount in rent is well below the £17000 income threshold (I'm on student loan plan 1).
    Also, can I offset costs such as service charge and ground rent - its a leasehold property - against the rental income?

    Thanks in advance for your help!

    Lucy

    You only have to make student loan repayments on unearned income over £2,000 if total income is over the repayment threshold and HMRC have required you to fill in a tax return. If you don't submit a tax return you are not required to repay on unearned income.
  • sunshine87
    sunshine87 Posts: 5 Forumite
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    Thanks for your reply.

    Will i not have to fill in a tax return for the money i make in rent? Even if its below any threshold for tax i thought i would still have to do a tax return?
  • Ed-1
    Ed-1 Posts: 3,891 Forumite
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    sunshine87 wrote: »
    Thanks for your reply.

    Will i not have to fill in a tax return for the money i make in rent? Even if its below any threshold for tax i thought i would still have to do a tax return?

    Depends how much rental income you get. If it's below £2,500 for the tax year then you can ring HMRC rather than fill out a tax return.
  • Keep_pedalling
    Keep_pedalling Posts: 16,623 Forumite
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    Ed-1 wrote: »
    Depends how much rental income you get. If it's below £2,500 for the tax year then you can ring HMRC rather than fill out a tax return.

    Surely no one is paying rent that low.
  • Arleen
    Arleen Posts: 1,164 Forumite
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    Keep_pedalling wrote: »
    Surely no one is paying rent that low.
    Not having the place rented out year-round could take it that low I imagine, depends on what the apartment is PCM.
  • Rover-man
    Rover-man Posts: 6 Forumite
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    edited 31 May 2018 at 7:01PM
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    Rather a lot of landlords don't declare their rental income and are blatently commiting fraud.

    I'm not saying the OP is doing this at all. Just that if I were a landlord, I'd be more worried about that.

    The fact the OP hasn't filled out a tax return is a big red flag though. Surely she wouldn't have felt it necessary to post this thread if she had, as then he'd be aware of how student loan repayments and unearned income work?

    The £2500 rule was mentioned, whereby they only have to contact HMRC but even then surely HRMC would ask about unearned income and it would have had to have been declared then?

    Interestingly, the OP has said on another post she made here that the flat is jointly owned her and her partner, so perhaps she doesn't own a large enough share. Still suggests to me though that HMRC needs to be contacted by at least one of them.
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