One of my clients, an actor, paid £310 in Student Loans for 2010/2011. This came out of the tax calculation when the Tax Return was submitted and the deductions were collected by HMRC on behalf of the Student Loans Co. The client is currently working for a theatrical company and was surprised to find a deduction of £19 per week appearing on his payslip. Actors are treated as employed for NI purposes but as self-employed for income tax. I called HMRC's Agent's Helpline to see if they could explain how the deduction was arrived at, but they were unable to assist. If there is a change in PAYE coding, HMRC sends out a notice to the taxpayer and to his agent, but the Student Loan Co has not communicated with either of us. I feel this is very high-handed, as the final figure of the student loan repayment may be much lower than that now being projected.
Does anyone have experience of this? How would a repayment be claimed? When I submit the 2012-2013 Tax Return, will there be a box for such payments made during the year? Presumably, then, HMRC may be able to net off the tax and the student loan repayments. The gentleman at the Agent's Helpline just did not know. If at any time my client is 'resting', he would certainly be grateful for the money then, rather than receive it after he has submitted his Tax Return, quite some months later.
Sam Merchant
Replies (11)
Please login or register to join the discussion.
Student loan repayment would apply separately to each week
Student loan is like NI, in that the repayments are not operated cumulatively, but individually on each payment.
In the week(s) where the client repaid £19 student loan how much was their gross pay for that week?
Fairness has nothing to do with it, unfortunately
I don't claim to understand the employment/self-employment status of actors, which seems to swirl around in the rules. But it seems that for the purposes of student loans the engagement in question is treated as employment and therefore attracts the automatic 9% deduction above c. £300/week.
I think you may be able to reclaim the student loan repayments after year end by getting an SA form in as quickly as possible so that HMRC can confirm that total income is lower than the annual repayment threshold and inform the SLC of this so that the excess repayments are returned.
Rebates from SLC
I think you can actually get SLC to reimburse an overpayment of Loan Repayments if this arises, but for certain the £19's would count as a payment towards his overall amount owed in Student Loan Repayments, so if the gig ran 10 weeks and he's paid £190 but his profits were identical to 2010/11 when he owed £310, you could claim a 'credit' for that and he'd only have £120 extra to pay, just as if a fully employed job would count it's deductions towards his overall situation.
We have had it happen on a couple of occasions and there've been over-repayments of student loan, but the amounts have never been worth contacting SLC and going through the hassle of getting back a couple of hundred. It's not like it's overpaying tax or similar - this is his debt being repaid. Although under the new £9K+ fees regime, repaying a student loan will become a joke for a lot of graduates, esp Actors!
What he can't do is get back any rebate that arose from voluntary repayments of outstanding loans.
Fascinating
and slightly worrying. We have a very substantial number of clients with student loans who are in this twilight zone of Class 1'd self-employment. Out of 100-150 I have seen student loan deductions in only a couple of cases. That they might be considering altering this is a bit of a concern. I will indeed keep an interest in this.
Fascinating
Explains a lot. Basically they're saying that the test of whether SLC deductions get made is whether or not Class 1 NI applies, even if this leads to incorrect and over-deduction of SLC payments - if that happens, sort it out yourself in hindsight.
But it overlooks how most entertainers arrive in a Class-1-NI-but-NT'd state. This happens as a musician/actor turns up to start the job. The 'employers' do not communicate with the Revenue - they just treat them as self-employed people for whom they happen to have to charge Class 1 NI. They are not coded NT by the Revenue but by the theatre - they don't turn up with a P45 or get issued a P46 so the instruction to slap deductions on them never happens although it could if arguments over status or codings did result in a formal NT code being issued.
That reverses the Revenue's chosen position. This drift into an NT coding means that this leads to under-deduction of SLC payments and we do sort it out in hindsight via the Return. But at least this way the right amount gets collected without the need for the client to be out of pocket.
Whether this will continue under RTI I can't say - I suspect things will change. But right now it's in no clients' interests to clarify this. I think their understanding as explained above is very clear but lacking practical on-the-ground knowledge of how the world works - a familiar state of affairs with the Revenue.