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HMRC internal manual

Collection of Student Loans Manual

HM Revenue & Customs
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SL repayments: calculation of loan repayments: unearned income

Is unearned income always taken into account in computing Student Loan repayments?

Unearned income may be taken into account in computing loan repayments only if

  • The amount of unearned income exceeds the threshold, currently £2,000


  • The borrower receives an SA return

Where unearned income is £2,000 or less

  • Disregard the unearned income for Student Loan purposes

Where unearned income exceeds £2,000

  • Take into account the total amount of unearned income. The first £2000 is not exempt

The annual threshold applies, even if the only source of income is unearned income.

The need for an SA return

Unearned income is included only if a statutory return has been issued to the borrower.

  • Do not create an SA record solely for Student Loan purposes
  • Do not restrict a repayment of tax to account for Student Loan liability if, exceptionally, no return has been submitted

The following examples assume an annual threshold of £16910 and a rate of 9 per cent.

Example 1 - Unearned income less than £2,000

Earnings £15,000

Unearned income £1990

Student Loan repayments £NIL because unearned income less than £2,000, and other earnings did not exceed the annual threshold

Example 2 - Unearned income more than £2,000

Earnings £16,000

Unearned income £2100

Student Loan repayments £68 ((£18,100 - £17,335) x 9 per cent) because the full amount of unearned income is included