Self Assessment and Student Loan Repayment

From April 2027 most benefits in kind (BIKs) will have to be processed through the payroll and included on monthly payslips, with a potential knock-on effect for student loan repayments. The mandatory payrolling of BIKs will be implemented in phases, starting from April 2027.

The earnings threshold above which student and postgraduate loan repayments are due depends on the type of loan and when you started your course. Many people will never be required to repay their loan in full, or even at all, if their earnings do not exceed the threshold for the life of the loan.

To determine whether repayments are due for taxpayers within self assessment HMRC will look at the total income declared on the self assessment tax return (SATR). From 2024-25 a new box has been added to the SATR for taxpayers to enter payrolled BIKs that are subject to Class 1A NIC only separately to the total PAYE income. This is because student or postgraduate loan repayments are not due on those BIKs. If the total PAYE income figure on the SATR includes payrolled BIKs, the repayments calculated by the system will be too high.

If you have two or more separate employments and your earnings from each are below the repayment threshold, those earnings will not be added together for the purpose of calculating your student loan repayments if both are paid via PAYE. However, if you report your earnings using self assessment, your total PAYE income from all employments will be added together which could result in student loan repayments being due.

It may therefore be beneficial to stay out of the self assessment system where possible to avoid making unnecessary student loan repayments, particularly if you do not anticipate earning enough from each separate income source to be required to repay the loan in full before its expiry date.

Certain recent changes, including the increase in the income reporting threshold from £1,000 to £3,000 and the ability to pay the high-income child benefit charge via PAYE, will remove the need for many taxpayers to file self assessment.

Contact us to discuss whether this could apply to you.