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Postgraduate Loan - How repayments are made

 

Repayment of your student loan will begin from April 2019, as long as you’re earning over £21,000 per year.

If you are employed

If you are employed your student loan repayments will be calculated by your employer, taken directly from your salary then, at the end of the tax year, sent to HM Revenue and Customs (HMRC).

Step 1 – repayments are taken from your salary

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Once you start to earn over £21,000 a year (£1,750 a month) your employer will begin taking student loan repayments from your salary. The amount taken will be shown on your pay slip.

Step 2 – your employer passes your repayments to HMRC

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At the end of each tax year your employer confirms with HMRC how much student loan you have repaid that year.

Step 3 – HMRC tells us how much you have repaid

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HMRC then tells us the total amount of student loan repayments you have made in the tax year.

Step 4 – we work out your new balance up to end of tax year

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We divide the total amount you repaid in the year into 12 equal monthly repayments. These are then paid to your loan as 12 monthly instalments and the interest is calculated and added for each month.

Step 5 – we send you a statement

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Once we have worked out your new balance we will send you a statement detailing how much you paid for the previous tax year, how much interest has been added and your total outstanding balance.

If you complete a Self Assessment tax return

HMRC will send you a self-assessment tax return after the end of the tax year. From the 2016 tax return onwards you will need to declare that you have a student loan to repay. HMRC will calculate how much you owe for the year and you will pay it as part of your annual tax bill.

Step 1 – you indicate on your Self Assessment tax return that you have a student loan

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When you indicate you have a student loan, HMRC knows to calculate how much you should repay based on your earnings for the tax year..

Step 2 – you pay your tax bill to HMRC

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HMRC will advise you of your total tax liability for the year, which will include any student loan repayment you are due to make, and you pay them directly.

Step 3 – HMRC tells us how much you have repaid

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HMRC then tells us the total amount of student loan repayments you have made in the tax year. The amount of student loan repayments you've made is included in your total tax liability for the year. HMRC only sends the student loan amount to us.

Step 4 – we work out your new balance up to end of tax year

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The total amount of student loan you've paid is applied to your account on the 31st January following the tax year to which the return applies. It is deducted from your loan balance as a single lump sum.

Step 5 – we send you a statement

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Once we have worked out your new balance we will send you a statement detailing how much you paid for the previous tax year, how much interest has been added and your total outstanding balance.


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