Student Loan Repayments for contractors - Non refundable overpayment

Dural123 · 17 April 2018 at 12:23PM

My P60 confirms that I have payed 11.5% of my earning to SLC above the 21k threshold. This should obviously be 9% but as my wage fluctuates on a weekly basis some weeks I get charged more student loan repayment than others.

I believe the calculation is based on earnings above a certain amount per week are liable for repayment but are these scaled up by 52 weeks to work out averages over the year? As I'm a contractor I don't get payed holiday and don't work 52 weeks of the year (more like 45) so if my weekly wage is multiplied by 52 to work out the 9% (which I think it is) then I'm overpaying every week.

The SLC will not refund me for this apparent over payment as its worked out on monthly earnings apparently.

The extreme of this would be if you earned 21K over say 6 months and nothing for the other 6. You would be assumed to have yearly earnings of 42k and make repayments on this amount (so 9% of 21k) even if your yearly earnings were below the minimum threshold.

This doesn't seem right.

agrinnall · 17 April 2018 at 3:02PM

Dural123 wrote: »

This doesn't seem right.

Perhaps you should be writing to your MP about it then.

sheramber · 17 April 2018 at 6:02PM

Your student loan repayment is calculated per pay period. If one week/ month your wage is over the limit you pay, if it is less you don't pay. It is not averaged over the year

http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,6678490&_dad=portal

Dural123 · 17 April 2018 at 6:40PM

My Umbrella company who take the payment calculate it by dividing the allowance by 52 so

£25,000 (new allowance) / 52 = £480/.76. Anything I earn above this in a week is liable to deductions. But the deduction itself is based on my earning in that week so say its £700 gross:

£700 x 52 = £36504 - 25000 = £11,504. x 9% = £1035.36 annually, £19.90pw deducted

but I do not work 52 weeks and do not get paid for time off or bank holidays.

£700 x 45 (weeks worked) = £31,500 (actual gross salary) - 25000 = £6500 x 9% = £585 annually, £11.25pw

This example means Im paying £310 a year more than I should be. My overall debt is massive and I will never pay it off so this is money that I will never see again and I have been told I cannot claim it back as an overpayment.

I can see why this calculation works for PAYE but for contractors its completely inadequate. There are people who work much more varied hours than I do who this must be effecting even worse.

sheramber · 18 April 2018 at 1:55PM

The weekly repayment threshold is set by the Student Loan agreement and is £480 for any weekly pay period.

If you were only employed for 6 months of the year earning over £480 a week you would make student loan repayments for that 6 months. Although you earned nothing for the next 6 months you would not get any repayment as each weekly pay period is assessed on its own. It is not connected in any way to a period before or after.

http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,6678784&_dad=portal&_schema=PORTAL

Dural123 · 18 April 2018 at 6:16PM

sheramber wrote: »

Your student loan repayment is calculated per pay period. If one week/ month your wage is over the limit you pay, if it is less you don't pay. It is not averaged over the year
The weekly repayment threshold is set by the Student Loan agreement and is £480 for any weekly pay period.

If you were only employed for 6 months of the year earning over £480 a week you would make student loan repayments for that 6 months. Although you earned nothing for the next 6 months you would not get any repayment as each weekly pay period is assessed on its own. It is not connected in any way to a period before or after.

Thanks but this just seems to confirm that the calculation method is inadequate. A contractors weekly pay is not representative of their yearly earnings.

If I earned £1000 in a week that would not mean my annual salary would be £52k but yet for that week I would be charged student loan repayment as if was on £52k.

The tax code that I am on works this out and I get repayments in my next paycheque after I have had time off.

Why can't I just claim back the overpayment once my P60 has confirmed by yearly earnings. I cant believe this issue has not been raised before for people who work on projects and do say 9 months on a 3 months off. (Civil Engineers come to mind)

sheramber · 19 April 2018 at 7:12PM

Because them's the rules.

Contact your MP about it if you want to complain about it.

Student Loan Repayments for contractors - Non refundable overpayment

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