SL repayments: borrower within SA: SA - final year of loan
You will find full details on what to do when an SA taxpayer is reaching the end of the repayment of a Student Loan in the ‘Returns’ business area of the SA Manual in section ‘Individuals Returns’, subject ‘Student Loan Cases’.
For the year in which the Student Loan is finally paid off it is probable that the CSL (Collection of Student Loans) liability calculated by reference to the income shown on the SA return will not exactly match the balance on the borrower’s account.
Note: You will be unaware of this amount and have no right to ask for loan account details.
When the return is captured an SA charge will be created and the balancing payment will be due on 31 January following the end of the year of assessment. This amount will have been computed using the full year’s income details and could therefore be in excess of the amount outstanding on the borrower’s loan account.
When a Student Loan is due to be paid off the Student Loans Company (SLC) advises the SA computer of this event. If this electronic notification is received before 31 December following the end of the year of assessment, it will apply, for Self Assessment purposes only, from the first day of the year of assessment. (This procedure is known as a ‘stop’).
For example, a ‘stop’ is issued on 20 December 2006. The stop will be applied with effect from 6 April 2005. No liability to Student Loan repayments should be assessed for the year 2005-2006. It is possible, if the return for the year 2005-2006 has already been submitted and captured, that the Student Loan liability requires amendment.
To improve this process HMRC and SLC have worked together and the SLC are now able to offer borrowers who are either
- Fully PAYE
- Are a combination of PAYE and SA
- Who are in the final 23 months of repaying their loan
an option to repay by a direct debit arrangement. This arrangement is administered solely by the SLC. In these circumstances no SA calculation will be made and employers will be instructed to stop all deductions from pay.
Alternatively, borrowers who submit their Return before 1 November prior to the submission deadline can tick box 3, which will allow a verification process to take place between HMRC and the Student Loans Company. More information on this process is available at CSLM19010.