CSLM20040 – SL repayments: underpayments and overpayments: PAYE borrower claims a refund of deductions
The employer may have correctly deducted Student Loan
repayments, but the borrower considers that a refund of repayments
is due because of
- The level of his or her income during the year
And
- The way in which the earnings were paid which may have caused apparent inconsistencies in the deductions made
This is the responsibility of the Student Loans Company but
general information is given below.
The question of whether a refund is due to the borrower
depends on whether the income for the year is more than the Student
Loan annual threshold. This can obviously not be determined until
after the end of the tax year.
The following examples demonstrate the position and assume
that the annual threshold is £15,000 and the rate is 9 per
cent.
Example 1 Borrower's income is
less than the annual threshold
The borrower has an annual salary of £13,320 paid
weekly. No deductions will be made by the employer on the salary
alone because the wages do not exceed the threshold of £299
per week.
However, in addition, a bonus of £900 is paid in week
32. For that week only the employer will have correctly made
Student Loan deductions. The deduction made in accordance with the
Student Loan Deduction Tables will be £77
Because the borrower’s earnings for the year did not
exceed the annual threshold of £15,000 a refund of the
deductions made, £77, will be due.
Notes:
- The employer will not make a refund because deductions were
made correctly according to the Student Loan Deduction Tables which
are non - cumulative
- The borrower should contact the Student Loans Company after the
end of the tax year with evidence of income and deductions. The
Student Loans Company will handle any refund of repayment
- The weekly limit, below which no loan repayments need be made, is not an exact divisible of £15,000. It is possible that an employer or borrower may query this.
The apparent discrepancy is because Student Loan deductions are always rounded down. A borrower could therefore earn slightly more than the strict weekly threshold before making payments because the resulting liability is less than £1.
The Student Loan Deduction Tables have been devised to take the rounding - down factor into account.
Example 2 Borrower's income is
more than the annual threshold, (£15,000)
The borrower has an annual salary of £14,320 paid
weekly. No deductions will be made by the employer on the salary
alone because the wages do not exceed the threshold of £299
per week.
However, in addition, a bonus of £900 is paid in week
32. For that week only the employer will have correctly made
Student Loan deductions. The deduction made in accordance with the
Student Loan Deduction Tables will be £61
It may appear that a refund of repayments is due to the
borrower because, by reference to the annual threshold the position
appears to be
Income (£15220) - Annual Threshold (£15,000) X 9
per cent = £19. Refund due £42 (£61 - £19)
However, no refund of deductions is due to the borrower
because
- The employer has deducted Student Loan repayments in accordance
with the Student Loan Deduction Tables
- The borrower's income for the year exceeds £15,000
