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Posted Wed, 24 Jan 2024 11:52:20 GMT by
I’m self-employed and a basic rate tax payer. For 2022-2023 plan 1 student loans are paid at 9% on earnings over £20,195.00. I can’t seem to find any information anywhere online stating that if you put money away into a pension it will reduce your student loan repayments. However - when I fill in the pension contributions section, my student loan repayment decreases. It seems to have raised the student loan repayment threshold by my gross pension contribution total (filled in under the relief at source section). Calculations below. I’d have thought if this is supposed to happen, it would be widely publicised - “Don’t forget to fill in your pension contributions to reduce your student loan repayments!!!!” Since it’s not, I’m assuming I’m doing something wrong? CALCULATIONS I’ve simplified the figures just as an example as to what’s happening: CALCULATION 1 - Student Loan Repayment £432.45 I expected the calculation to be as follows: Net earnings (after expenses deducted): £25,0000 Earnings, minus student loan repayment threshold: £25,000 - £20,195.00 = £4,805.00 Student Loan Repayment: 9% of £4,805.00 = £432.45 CALCULATION 2 - Student loan repayment £432.45 But, the student loan repayment threshold seems to have increased by my gross pension contributions: Gross pension contributions (relief-at-source): £3000.00 Student loan repayment threshold + gross pension contributions: £20,195.00 + £3000.00 = £23,195.00 Earnings, minus the increased £23,195.00 threshold: £25,000 - £23,195 = £1,805.00 Student Loan Repayment: 9% of £1,805.00 = £162.45
Posted Mon, 29 Jan 2024 08:15:15 GMT by HMRC Admin 19

If you pay in to a personal pension, whether monthly through your company payroll or directly as a lump sum, student loan contributions are worked out using your gross pay, unless you pay in to your pension by salary sacrifice.

You can complete a Self Assessment tax return to have the pension contributions taken into account. For each £1,000 you pay in to your pension, £800 net, each year you could pay around £90 extra in student loan repayments.

Thank you.
Posted Mon, 29 Jan 2024 15:16:04 GMT by
I am experiencing the exact same thing, that my student loan repayment amount is being reduced as if my income does not include my pension contributions. The response above sounds inattentive to the question, as it mentions company payroll, and then merely tells us that the way it works is contrary to what the original poster (and myself) are seeing in the calculation. So there's a mistake in the calculation, is there? What are we supposed to do about that?
Posted Thu, 01 Feb 2024 09:40:37 GMT by HMRC Admin 2

You would need to make sure that the pensions contributions are in fact correctly declared. If you  make these under the net pay arrangement, then full relief has already been given and should not be on the return.

If this is not the case, please contact the student loans team as the contributions should not affect your payments.

Thank you.


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