Hi,
I have a client where a student loan is repayable due to high levels of dividends. I need to adjust the amount owed for the student loan, as the amount being calculated is far more than the remaining amount owed on the loan. I am using HMRC software and cannot find where I can adjust this. Any ideas?
Thanks
Sarah
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Replies (7)
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I don't believe you can. I think it's a case of paying the calculated amount and then obtaining a refund from the SLC.
Or could you can contact SLC, pay the outstanding balance voluntarily and then you would not need to include it in the tax calculation. HMRC suggest in the Tax Return notes that you should contact SLC if you are nearing the end of the loan.
Voluntary overpayments
Or could you can contact SLC, pay the outstanding balance voluntarily and then you would not need to include it in the tax calculation. HMRC suggest in the Tax Return notes that you should contact SLC if you are nearing the end of the loan.
As I understand it voluntary overpayments do not reduce the amount that is calculated via self assessment. Per the guide below
A voluntary payment does not affect the amount of any Student Loan repayments based on your income and deducted:
• by your employer; or
• those calculated through the SA process
described above.
You cannot choose to make voluntary payments instead of, or in place of, the above repayment methods. Voluntary payments will always be in addition to any sums collected by HMRC.
As suggested above...
.... unfortunately, you have to overpay on the loan through SA and then get a refund from The SLC.
Student Loan Calculation
I've come across this a couple of times and in every case the SLC unit at HMRC (Centre 1) told me to put a note in the additional information page on the Tax Return stating that the client wishes to informally standover the amount of £x (x being the excess amount calculated but not due). The client then pays the reduced amount (i.e. the actual amount due) over to HMRC and they then square the position with SLC.
In virtually every case, the client has had a letter regarding unpaid tax (i.e. the amount stood over) whilst HMRC are squaring the position with the SLC but a quick phone call to point them towards the note on the Tax Return was sufficient to sort the position.
So the client doesn't actually have to overpay on the loan, they can pay the correct amount and HMRC will accept the 'underpayment' if you tell them why.
Hope this helps
SLR
It's now possible to enter into a direct debit arrangement with the SLC when nearing the end of the loan (within 23 months?) so that this problem of overpaying and then reclaiming can be avoided.
Student Loan Calculation
I agree with ssutherland, the way to deal with this is by using a note in the 'white space' on the return asking HMRC to hold over the excess amount. This is the method that HMRC recommend and so far I've found that it actually works.