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HMRC internal manual

Self Assessment Manual

Appeals, postponements and reviews: postponements: student loan overpayments

This subject supplements the guidance given in subject ‘Handling an informal standover’ (SAM11070) and gives further information about when you should informally standover all or part of the amount of Student Loan repayment requested in the SA calculation.

Background

Under the current legislation, the Student Loan repayment we can collect through a taxpayer’s self assessment is an amount equal to 9 per cent of the eligible income above the threshold.

When an SA taxpayer is reaching the end of the repayment of the loan, he or she may contact you and complain that the amount outstanding on the loan is less than that requested in the SA calculation.

You must not attempt to amend the return to collect only the amount the taxpayer says is outstanding.

You should advise the taxpayer that the details of the amount included in the SA calculation will be sent to the Student Loans Company (SLC). If this amount exceeds the outstanding balance of the loan, the SLC will tell HMRC the amount of the excess, in due course. This is reported to the East Kilbride Student Loans Unit (EKSLU) who will take the appropriate action to credit the customers SA Statement of Account.

Details of the Student Loan repayments collected through SA are not sent to the SLC until after 31 January following the year of the return. The taxpayer is also due to pay the SA liability is by this date.

Informal standovers

If the taxpayer considers the amount of Student Loan repayment collected through SA to be excessive, he or she can ask for an amount to be informally stoodover. Any such request should be in writing, and you should acknowledge the request and informally standover the appropriate amount. When acknowledging the request, you must explain that the amount will be shown on future statements as ‘Collection suspended’, and that if any of this amount later becomes payable interest will be payable on overdue amounts.

Note: When an informal standover request is made and all, or part, of the standover relates to a Student loan, the East Kilbride Student Loan Unit must be notified. For action to take see subject Postponements: student loan overpayments (Action Guide) at SAM11131.

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Excess amount notified to HMRC from the Student Loans Company

When the SLC receive details of the amount of Student Loan repayments collected through SA, they will compare this with the balance of the loan outstanding. Where an overpayment occurs the SLC will inform EKSLU of the overpaid amount. The SLC will also send confirmation of this to the taxpayer. EKSLU will

  • Trace the UTR of the taxpayer concerned
  • Use Function CREATE RETURN CHARGE to credit the customer’s SA Statement of Account with the excess
  • Remove the Informal Standover

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Amending the informal standover

If, by the BF date you have not received notification from EKSLU that the customer has a student loan excess, you should assume that the amount included in the taxpayer’s self assessment was correct. You must cancel (or reduce) the informal standover and notify the taxpayer accordingly.