HMRC have updated it’s guidance ‘Tell HMRC about a student or postgraduate loan in your tax return’.
This clarifies the information required regarding any Student Loan that is eligible for repayment, regardless of whether any repayment has been made.
Section 2 ‘Tell Us About You’
If you are completing an online tax return for a client and they have a Student Loan, you will need to ensure this section is marked with an X. This is regardless of whether an employer made a deduction or whether the income was below the relevant threshold. You will require the following information:
- The relevant Student Loan Plan (1, 2 or 4)
- The relevant Student Loan Plan (3, still referred to as Postgraduate Loan)
It could be that the taxpayer is repaying an Undergraduate Loan (1, 2 and 4) and a Postgraduate Loan (Plan 3). Plus, it may be that the tax return is pre-populated with these values. The information provided in this section will be checked with information supplied by the Student Loans Company.
Section 4 ‘Fill in your Return’
If the taxpayer has made repayments, in this section, enter the amounts deducted through the payroll. These amounts will be checked against information that has been supplied by the employer (via the Full Payment Submission).
Do not include any overseas direct debit payments or voluntary payments that have been made.
For Bookkeepers
The above guidance relates to online completion of the tax return. The process is similar in terms of notifying the Loan type and repayments if the return is completed on paper.
As ICB pointed out this time last year, note that HMRC’s systems pre-calculate repayments based on the value of taxable pay. Student Loan repayments are calculated based on the value of pay subject to Class 1 National Insurance Contributions (NICs). So, HMRC’s cross-checking of information provided by the employer and that calculated by their systems could vary in the instances where the employer has payrolled benefits or expenses. These are subject to Income Tax but not Class 1 NICs (depending on the benefit of expense, Class 1A NICs will be due).
So, ICB refers you to the guidance on HMRC’s workarounds to this situation which may result in a mismatch of information, with HMRC’s systems believing one value and the employer declaring another value. If the return is completed online (deadline 31 January 2025):
1. Obtain the value of payrolled benefits and deduct this value from total PAYE income for the tax year
2. At section 4, ‘Fill in your return’ and the part ‘Income from your employer’, enter the value of PAYE income LESS payrolled benefits in kind in the ‘pay from employer’ (box employment 03)
3. Select ‘yes’ in the part that asks if taxable benefits have been received from the employer
4. In the next section (employment) , enter the payrolled benefits in kind figure in the ’other benefits’ box
5. In the ‘additional information’ box, enter the text ‘I have entered my payrolled benefits in kind in the ‘other benefits’ section as I’m a student loan borrower’
A similar workaround is required is the return is submitted on paper via the SA100 which must be requested from HMRC for tax year 2023/24.
