Student Loans and Income Tax

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi

Bit of an odd question, but can anybody tell me whether income tax is calculated before of after the deduction of student loan payments?

Eg if gross wages are £2000 per month and the student loan repayment is £100 per month is the employee taxed on £2000 or £1900?

In other words is there tax releif?

Thanks in advance.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Student Loans and Income Tax

    HiSleuthey,

    I don't think there is any tax relief for the student loan deduction. What normally happen is to use SL3(Student Loan Deduction Tables). The appropriate deduction applicable for weekly and monthly pay has already been calculated taking the threshold into consideration. I will use the
    £2000.00 as an example. For 2005/06 £67.00 will be the amount of deduction made on £2000.00. You will also apply the same £2000.00 while calculation both tax and NIC.

    You cannot deduct the £67.00 from £2000.00 and use the net balance of £1933.00 for NIC and tax purposes.

    I will advice you to browse on HMRC website and read more on SL3 and E17(Making student loan deduction). They are very useful. I hope this answer your question.

    if you're not clear, please let me know.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Student Loans and Income Tax

    Thats great thanks!

    I have phoned the Inland Revenue and the student loans company twice and I have had mixed responses from both so you have cleared things up.

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