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Student Loan on Self-Assessment

Treatment of Student Loan on Self-Assessment Tax Return in the year it is fully repaid

I have a client I am currently in the process of completing their 2016/17 tax return for. They made a lump sum payment in June 2016 to fully pay off the outstanding balance on their student loan.

I would just like to check what are the requirements for recording the student loan on this tax return? 

I am using Tax Filer and in the student loan repayments section I can only find options to either make the loan liable for repayments or not liable for repayments. There are no options for putting in that the loan has ceased and the date it ceased. I assume I simply need to select that it is not liable for repayments because otherwise student loan deductions are made based on the entirety of the year which can't be correct as it was repaid in June 2016.

Or now that it has been repaid in the year, does the section even need filling out?


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19th May 2017 15:56

I have dealt with this once before in a year where the client repaid in full.

The solution was to declare repayments were due and then write to HMRC informing them of the balance being fully repaid on whatever date. This should then remove the need for the payment to be made.

I would also include a white space disclosure for clarity.

Please note my experience occurred in 2014/15.

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19th May 2017 16:12

Agree. You have to declare that the payments are due, tick the box to say that it was to be repaid within 2 years, which I then understand triggers HMRC to contact Student loans, who will provide HMRC with the outstanding balance (£nil in your case) and HMRC will amend the calculations according. Bit of a faff but it's important to get the tax return in early so that HMRC and Student Loans have time to make contact. This is based on 1 experience about 6 months or so ago. It took them 2 months to update the return, so probably worth a phone call after filing the return to ensure the contact is triggered.

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22nd May 2017 14:15

Word of warning - keep on top of HMRC with this one and don't take their word for it that they will sort it out. I was told on at least 5 occasions that this balance wasn't due and that they would communicate with the student loans company but for over two years it kept reappearing on my account. Once I actually received a letter from them confirming nothing was due only to receive another the following day to say that the balance was due.

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