Student loan - first self assessment after notice

Student loan deductions to begin September 2023 but self assessment demanding full year

Didn't find your answer?

An individual is in self assessment for 2023/24. Their student loan deductions start from September 2023 onwards. 

These were correctly processed on their employment income.

They are in Self Assessment due to some self-employment income, which was minimal (just over £1,000).

The tax calculation produced by Digita calculates Student Loan deductions (plan 1) on the full tax years income.

This obviously results in Student Loan being calculated on the Apr-Sep income as well as the Oct-Mar income from their employment (and their Self-Employment income).

Is this correct? Do you those in Self Assessment not enjoy the same benefit as those who are just employed of not being assessed on the full year of earnings/income?

I can't see any guidance anywhere to indicate you can pro-rate in this first year where Student Loan deductions are due? I know you can manually override the Student Loan due on Digita, but I need a good basis to do this as I believe HMRC basically ignore this and you then have to call them to explain!

Any help/pointers would be appreciated, thank you!

Replies (9)

Please login or register to join the discussion.

By WinterDragon
08th May 2024 16:58

That's a good brain teaser for a Wednesday afternoon. I believe SL repayments are due for the entire year and it isn't correct to pro-rate these. Unfortunately, your client may have fallen slightly foul of the rules and must make contributions for the entire year despite the employer only deducting SL repayments from October.

I haven't dug out the legislation but CSLM16020 & CSLM16030 seems to suggest that as the client is self-employed, the repayments are calculated on an annual basis and due within the balancing payment. The employer is still obligated to deduct SL repayments for each pay period in isolation so a credit is given against the balancing payment for repayments made through PAYE.

Sorry, it's probably not the answer you were hoping for but I think the software is correct.

Thanks (2)
Replying to WinterDragon:
By lego323
09th May 2024 06:21

Thank you and for the references to HMRC guidance. I shall see if I can follow these back to the legislation.

Thanks (0)
By FactChecker
09th May 2024 00:10

"Do you those in Self Assessment not enjoy the same benefit as those who are just employed of not being assessed on the full year of earnings/income?"

Yet another in the long line of people who believe that if PAYE is operated correctly by an employer then the employee (in their more general capacity as a taxpayer) must be OK and fully up-to-date ... in this case with SL deductions/repayments.

The Payroll will simply:
(1) look at whether there is a notice to deduct SL (and if so for which type), and
(2) apply the rules for each pay period, from first pay period to which notice applies.

But that doesn't mean the taxpayer's full liability has been discharged for the tax year (which is how HMRC still reconcile everything).

It's not that there's a different set of rules for those completing SA ... just that doing so shows those rules (that should have been applied by the taxpayer) more clearly.
But you're right in the sense that without the self-employed income there would have been no obvious need for SA ... and it's very likely that no-one would've noticed. But rules is rules.

Thanks (4)
Replying to FactChecker:
By lego323
09th May 2024 06:19

Thanks for the rant about people like me...
but you don't seem to have answered the question really with any reference to guidance or legislation unlike the other kind user? Would you be so kind as to point to the "rules is rules" in the legislation that you refer to?

Thanks (1)
Replying to lego323:
Danny Kent
By Viciuno
09th May 2024 09:28

Considering you have been a member for 6 1/2 years and contributed nothing to the forum apart from asking for advice you should have just stopped after "Thanks".

Thanks (3)
Replying to Viciuno:
By lego323
09th May 2024 09:45

Comments with snark aren't really contributing anything to be honest (looking back at their history, as I did too before my original comment, showed this is not uncommon of them). Sure I shouldn't have been snarky back as it just feeds people's ego.

Thanks (1)
Replying to lego323:
By FactChecker
09th May 2024 13:25

Your view as to what constitutes a 'rant' doesn't fill me with much hope that you will enjoy reading what you've asked for ... but you are welcome to relax and read
(all you had to do was type 'student loan repayment legislation uk' into Google).

EDIT: I now regret being even that helpful, having seen your follow-up!
If you weren't labouring under the misapprehension that I 'assumed' (on the basis of the evidence within your original post), then what was the point of your question (to which I gave a reasonable explanation)?

And if you really feel that my "Comments aren't really contributing anything", then could you enlighten us all as to what you've contributed so far?

Thanks (2)
By Dougscott
09th May 2024 11:15

I had a similar problem with a client who had largely been on PAYE but not asked to make deductions until late in the tax year whereby the Tax Return was calculating a large amount due (and a lot of it was an extrordinarily high interest rate). I remember looking in detail at HMRC guidance and couldn't see a way out of it initially. Luckily (and unusually) the clients PG loan had only been about £5000 so I told her to ring up the Student Loans Company and pay the loan off which meant I could say on the Tax Return the loan had been paid off and it avoided the high interest charges. IT's just one of the weird quirks of the rules.

Thanks (1)
By Paul Crowley
09th May 2024 11:41

The tax calculation in the software must agree with HMRC's tax calculation.

Thanks (1)