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For many people student life is a blast – but the financial hangover isn’t so much fun. University debts are higher than ever and making the repayments on student loans can be even scarier when you’re self-employed.

Small business owners, contractors and freelancers will need to confirm the details of their student loan on their Self Assessment tax return. If this applies to you, we’ve put together our quick guide about repaying your student loan when you’re self-employed.

Do I need to complete a Self Assessment tax return?

Each tax year runs from 6th April until 5th April. You will need to complete a Self Assessment in order to declare your income if at any point during the tax year you were:

Check if you need to send a tax return.

Who Needs to Complete a Self Assessment tax return?

What do student loans have to do with Self Assessment?

If you’re self-employed and have student loans to repay, your tax bill for the year might be a bit of shock depending on how much you earn. This is because student loan repayments are collected on self-employed income, as well as on income that you earn from an employer.

The Self Assessment tax return includes a section about student loans, and you’ll make any repayments as part of your tax bill for that year. The payment deadline for Self Assessment is 31st January after the end of the tax year.

HMRC will then pass on your student loan payment to the Student Loan Company, and your loan account will be updated accordingly.

How much can I earn before I start paying my student loan?

Student loan repayments will only kick in once you start earning above a certain threshold. The threshold is normally updated every year on 6th April, at the start of the new tax year.

To understand how much you’ll pay, you first need to know the plan you’re on:

Plan 1

You’re on Plan 1 if you’re:

Plan 2

You’re on Plan 2 if you’re:

Plan 4

You’re on Plan 4 if you’re:

Repaying your student loan

Which plan you’re on How much you earn in a tax year before making student loan repayments (Income before tax and other deductions)
Plan 1 Income is over £382 a week, £1,657 a month, or £19,895 a year
Plan 2 Income is over £524 a week, £2,274 a month, or £27,295 a year
Plan 4 Income is over £480 a week, £2,083 a month, or £25,000 a year

How and when do I send a Self Assessment tax return?

Your Self Assessment tax bill usually consists of income tax, National Insurance, and student loan repayments. You will need to pay your bill by 31st January after the end of the previous tax year, though you can submit your return much earlier than that!

So, tax due for the 2021/22 tax year is due for payment by 31st January 2023. You may also need to make a payment towards the next tax year, called a payment on account.

 

 

 

I have a Postgraduate Master’s Loan or Postgraduate Doctoral Loan. When will I start repaying?

If you took out a Master’s loan, you’ll start paying it back monthly once your income exceeds £404 a week or £1,750 a month (before tax and other deductions). You’ll need to start paying it back from the first April after you finish your course.

For a Doctoral loan, you only start paying it back once you’re earning over £404 a week or £1,750 a month (before tax and other deductions). It becomes payable from either the first April after you finish your course, or the April four years after the course started.

If you’re a Scottish or Northern Irish student who took out a Postgraduate Tuition Fee Loan or Postgraduate Living Cost Loan (Scotland only) repayments will start as soon as you’re earning at least £18,330 a year.

 

If you have any questions around self-employed tax issues, our team are here to help. Find out more about our online accounting services, call 020 3355 4047 for a chat, or get an instant quote online.

 

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About The Author

Elizabeth Hughes

A content writer specialising in business, finance, software, and beyond. I'm a wordsmith with a penchant for puns and making complex subjects accessible. Learn more about Elizabeth.

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