Student Loan Repayments

Student Loan Repayments

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Student Loan Repayments (SLRs) are collected under PAYE or by Self Assment (for the self employed)

So an employee who has no other income shouldn't need to submit a tax return as the employer should make all the deductions necessary.

But what if the employee has other income, say dividend income, but is still not liable to higher rate tax. There will be no tax liability but there will be a SLR due.

For example an employe earns £20K a year and the employer deducts £450 (9% of the excess over £15k). He also has £15K (gross) dividend income. He is not a higher rate taxpayer but there is a SLR liability of £1,350 (9% of £15k).

If the employee is not sent a tax return does he need to notify chargeability? SLRs are not ibcluded in s7(1)(a) TMA 1970 but are they included elswhere in the legislation regarding notifying chargeability.

Any thoughts
Barry Hallam

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By gerrycochran
08th Sep 2007 11:58

Collection of Student Loans Manual
The following is an extract from the HMRC's Manual:

Is unearned income always taken into account in computing Student Loan repayments?

Unearned income may be taken into account in computing loan repayments only if

• The amount of unearned income exceeds the threshold, currently £2,000
And
• The borrower receives an SA return

Where unearned income is £2,000 or less
• Disregard the unearned income for Student Loan purposes

Where unearned income exceeds £2,000
• Take into account the total amount of unearned income. The first £2000 is not exempt

The annual threshold (see Appendix) applies, even if the only source of income is unearned income.

The need for an SA return

Unearned income is included only if a statutory return has been issued to the borrower.
• Do not create an SA record solely for Student Loan purposes
• Do not restrict a repayment of tax to account for Student Loan liability if, exceptionally, no return has been submitted

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