Student loan and pension contributions impact
dandan83
Posts: 6 Forumite
Hi all,
I just cannot find an answer to this I'm sure the info is out there somewhere, I have a class 1 student loan earn 21k before any deductions and pay about 1k pension.
I get child tax credit as I have 2 kids and was going to pay 3k a year (from savings) into a stakeholder pension because it only costs 39%! We have a big income drop this year so disregard isn't such a problem.
(20% tax relief)
(39% my contributions)
(41% back in child tax credits)
Anyhow my 2 questions are this!
1) Can I reclaim my student loan contributions that I paid through my employer back as this would mean earning 21k and pension 4k making 17k, which is below repayment threshold ?
2) I also do a bit of work on the side which is worth maybe 2k-4k a year for which I have to do a tax return, Im paying it all into the same said pension (because of the stupid rules where I'd actually only see about 30% in my pocket), would that attract student loan repayments too??
This all came about as I got really fed up that I would be working my extra for 30% and seeing as you can always have more pension options, I'd try and turn my frown upside down
Aiming to roll over as long as possible with perm. 3 k pension contributions as well as any extra from extra earnings.
Thanks!
Some info from student loan website:
Claiming back student loan repayments if you earned less than the annual repayment threshold
It is possible that you had a student loan deduction in a pay period where you earned over the monthly or weekly threshold, but over the whole year your income did not exceed the annual repayment threshold. This might happen if you receive a bonus payment or work overtime.
In this situation you will be able to apply to us for a refund of the repayments you have made in that year. However, we will not make a refund unless you ask for one.
I just cannot find an answer to this I'm sure the info is out there somewhere, I have a class 1 student loan earn 21k before any deductions and pay about 1k pension.
I get child tax credit as I have 2 kids and was going to pay 3k a year (from savings) into a stakeholder pension because it only costs 39%! We have a big income drop this year so disregard isn't such a problem.
(20% tax relief)
(39% my contributions)
(41% back in child tax credits)
Anyhow my 2 questions are this!
1) Can I reclaim my student loan contributions that I paid through my employer back as this would mean earning 21k and pension 4k making 17k, which is below repayment threshold ?
2) I also do a bit of work on the side which is worth maybe 2k-4k a year for which I have to do a tax return, Im paying it all into the same said pension (because of the stupid rules where I'd actually only see about 30% in my pocket), would that attract student loan repayments too??
This all came about as I got really fed up that I would be working my extra for 30% and seeing as you can always have more pension options, I'd try and turn my frown upside down
Aiming to roll over as long as possible with perm. 3 k pension contributions as well as any extra from extra earnings.Thanks!
Some info from student loan website:
Claiming back student loan repayments if you earned less than the annual repayment threshold
It is possible that you had a student loan deduction in a pay period where you earned over the monthly or weekly threshold, but over the whole year your income did not exceed the annual repayment threshold. This might happen if you receive a bonus payment or work overtime.
In this situation you will be able to apply to us for a refund of the repayments you have made in that year. However, we will not make a refund unless you ask for one.
0
Comments
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Student loans repayments are based on your earnings, not earnings minus pension contributions.0
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Plan 1 student loan repayments do drop if you have a salary sacrifice pension (only delays repayment though obviously)0
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Can you tell me where you got this information that pension payments reduce student loan repayments?0
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1961templar wrote: »Can you tell me where you got this information that pension payments reduce student loan repayments?
It depends what pension scheme you are in. I am in a DB pension scheme, and my plan 1 student repayment is calculated on my salary after my pension is deducted via salary sacrifice.
"Whether student loan repayments are taken from your salary before or after you make a pension contribution depends on how you contribute, and what sort of scheme you're in.
Defined benefit schemes.
If you're in an employer's pension scheme, eg, final salary/average salary, your student loan repayments will depend on how the scheme's administered.
You pay student loan repayments on the same income that your employer pays national insurance contributions on. So, if your pension contributions lower this figure, then that's the one assessed for student loan repayments.
However, some defined benefit schemes take the pension payment pre-tax, but after national insurance. In which case, you'll have slightly higher student loan contributions.
Defined contribution schemes (this is what most people now have).
If you pay in to a personal pension, whether monthly via your company payroll or directly as a lump sum, student loan contributions are worked out using your gross pay (unless you pay in to your pension by salary sacrifice).
You can do a self-assessment tax return to have the pension contributions taken into account. But decide if it's worth the hassle of going self-assessment if you don't already. For each £1,000 you pay in to your pension (£800 net) each year, you could pay around £90 extra in student loan repayments."
https://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes/#earn0 -
Hi all,
I just cannot find an answer to this I'm sure the info is out there somewhere, I have a class 1 student loan earn 21k before any deductions and pay about 1k pension.
I get child tax credit as I have 2 kids and was going to pay 3k a year (from savings) into a stakeholder pension because it only costs 39%! We have a big income drop this year so disregard isn't such a problem.
(20% tax relief)
(39% my contributions)
(41% back in child tax credits)
Anyhow my 2 questions are this!
1) Can I reclaim my student loan contributions that I paid through my employer back as this would mean earning 21k and pension 4k making 17k, which is below repayment threshold ?
2) I also do a bit of work on the side which is worth maybe 2k-4k a year for which I have to do a tax return, Im paying it all into the same said pension (because of the stupid rules where I'd actually only see about 30% in my pocket), would that attract student loan repayments too??
This all came about as I got really fed up that I would be working my extra for 30% and seeing as you can always have more pension options, I'd try and turn my frown upside down Aiming to roll over as long as possible with perm. 3 k pension contributions as well as any extra from extra earnings.
Thanks!
Some info from student loan website:
Claiming back student loan repayments if you earned less than the annual repayment threshold
It is possible that you had a student loan deduction in a pay period where you earned over the monthly or weekly threshold, but over the whole year your income did not exceed the annual repayment threshold. This might happen if you receive a bonus payment or work overtime.
In this situation you will be able to apply to us for a refund of the repayments you have made in that year. However, we will not make a refund unless you ask for one.
Based on the information you've provided, you have a defined contribution pension scheme (please correct me if I am wrong).
Based on the information in my post above, your student repayment is based on your gross pay, so any additional voluntary contributions to your pension will not have any effect on the amount you repay on your student loan.
As such, I don't think you will be entitled to reclaim any student loan repayments.0 -
Based on the information you've provided, you have a defined contribution pension scheme (please correct me if I am wrong).
Based on the information in my post above, your student repayment is based on your gross pay, so any additional voluntary contributions to your pension will not have any effect on the amount you repay on your student loan.
As such, I don't think you will be entitled to reclaim any student loan repayments.
Lots of DC schemes are via salary sacrifice (mine is). This is the exception covered in your points above. It's not really DB vs DC but how the pension is contributed to.Thinking critically since 1996....0 -
somethingcorporate wrote: »Lots of DC schemes are via salary sacrifice (mine is). This is the exception covered in your points above. It's not really DB vs DC but how the pension is contributed to.
Ah yes you are quite right. I missed that last point in parentheses!
So if the OP does regular pension contributions via salary sacrifice, but the AVC as a lump sum, then presumably it would be calculated by splitting the way contributions are made accordingly?0 -
Ah yes you are quite right. I missed that last point in parentheses!
So if the OP does regular pension contributions via salary sacrifice, but the AVC as a lump sum, then presumably it would be calculated by splitting the way contributions are made accordingly?
Logically, I think that is correct but would need one of the proper experts to confirm!Thinking critically since 1996....0
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