Mature Student with Pension Income - Student loans

Classification of Pension Income - whether it attracts 9% Student Loan Repayment Liability?

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Hello, apologies if this has been posted previously but I cannot locate a clear answer on this query.

Mature student with private pension income of around £50K plus rental income and currently submitting annual tax returns. Notice of student loan repayment to commence next tax year. The let property is due to be sold next tax year and subsequent tax years will have no requirement to submit tax return. 

Student is due to commence work with an employer & contribute 7.7% pension

The paid employement will attract a Student Loan Repayment liability where the threshold is exceeded.

In circumstances where no tax return is filed, is the pension income subject to student loan repayment liability in addition to the salary?

Many thanks. 

 

Replies (11)

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Replying to DJKL:
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By RF1970
24th Jan 2024 20:05

That is exactly what I needed - thank you. I think from reading this, no SL liability will become due once the self assessment liability ceases.

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By Not Anonymous
24th Jan 2024 19:31

LITRG have useful info on this, although you will need to know the specific student loan type.

https://www.litrg.org.uk/tax-guides/students/student-loans/plan-2-studen...

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Replying to Not Anonymous:
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By RF1970
24th Jan 2024 20:04

Thank you - this is really helpful. It is a student loan type 2.

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By FactChecker
24th Jan 2024 20:07

AFAIK 'earnings' with regard to the calculation of SL deductions is considered to be indistinguishable from 'NIable earnings'.

And pension income (which is usually 'taxable earnings') is not 'NIable earnings'; however, pension contributions (which, depending on various factors, are 'taxable earnings') will not reduce any 'NIable earnings' (that are subject to SL deductions).

[In the absence of further detail, I won't pass comment on why someone "with private pension income of around £50K plus rental income" would take out a SL in the apparent hope of not having to repay all of it.]

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Replying to FactChecker:
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By RF1970
24th Jan 2024 20:25

Can you clarify further please? Pension Income (PI) is obviously subject to tax but not NI deductions. Is it your view that the PI is liable to SL liabilities?

In response to your last 'non-comment' (though clearly it was), the SL was not taken out hoping that repayment could be avoided. The pensions came about through extremely sad circumstances - it is a dependents pension through spousal bereavement. If it is is due it's due - just trying to sort out affairs and clarify.

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Replying to RF1970:
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By FactChecker
24th Jan 2024 21:53

I'd be happier giving 'my view' if I had time to check the actual legislation - but I don't which is why I prefaced it all with AFAIK.
But if my memory is correct ... i.e. pension income is not 'NIable earnings', and the calculation of SL deductions is based on 'NIable earnings' ... then, no, pension income should logically not be liable to SL liabilities.

But I do stress the word 'should' there.
Pensions are not a single homogenous group of income streams with identical treatment in all circumstances - and I have no particular experience of those paid through spousal bereavement (which may be treated differently).

[BTW what I meant by 'not passing comment' was not getting involved in any moral judgement, so my use of 'apparent' was unfortunate - apologies. But if the rental-generating property is being sold, then presumably there's an option to pay down (some of) the SL.]

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Replying to FactChecker:
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By RF1970
24th Jan 2024 22:49

Thank you - this seems to align with the other two responses.

Your comment came across as a thinly veiled moral judgement and added nothing of value. Please be kinder when people ask for help or scroll on by - responses like these put people off from posting.

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Replying to RF1970:
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By FactChecker
24th Jan 2024 23:24

"Please be kinder" ... you do know how ironic that is don't you!

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Replying to RF1970:
Danny Kent
By Viciuno
25th Jan 2024 10:03

RF1970 wrote:

Please be kinder when people ask for help or scroll on by - responses like these put people off from posting.

Comments like this put people off giving their spare time for free to random strangers, especially in January.

FactChecker has been incredibly helpful and frankly you should be grateful they took the time to reply at all - and if they did think your client was a chancer, so what.

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Replying to RF1970:
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By David Ex
25th Jan 2024 10:16

RF1970 wrote:

Please be kinder when people ask for help or scroll on by - responses like these put people off from posting.

Why is it always people who have just joined, and contributed nothing to the forum, that are the first to tell everyone how to use it?

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