HMRC systems cannot differentiate between certain types of income which could lead to an overpayment of student loan deductions. What’s the solution?
If you make student loan repayments and you’re also within the self-assessment regime, you’ll be aware that any student loan repayments due on additional (typically non-PAYE) income are calculated and collected via your tax return. This would ordinarily be straightforward, but HMRC has confirmed that, despite student loan deductions not being due on benefits-in-kind, its systems are incorrectly including such income in the calculations. This means that affected individuals will end up paying higher student loan payments than is necessary. Therefore, if you’re in self-assessment and you have payrolled benefits in kind, such as a company car or private medical insurance, you will need to follow HMRC’s guidance to ensure the student loans figure is calculated correctly. The current workaround is in place until shortcomings in HMRC systems can be addressed.
This article has been reproduced by kind permission of Indicator – FL Memo Ltd. For details of their tax-saving products please visit www.indicator-flm.co.uk or call 01233 653500.