Student loan repayments while contracting

[Dinosaurobots]

Hi

Apologies if this has been asked before. I couldn’t find it in the FAQ or by searching, and I couldn’t find much on the subject on the Student Loans Company site.

I started contracting two months ago. I lost my permanent job a while ago, was offered a week’s temping at a charity, and then some months later was offered a 3-month contract at a different employer. The contract is up next month. I’m using an umbrella company.

I’ve never earned enough to go over the student loans repayment threshold before, and now I’m earning more per month than the threshold. But I’ve no way of knowing how much I’ll be earning once this contract’s up.

So my question is: can I defer repayments of my student loans again, even though for 3 months I’ve been earning over the threshold, or am I right in thinking that I have to start repayments and then stop again once my earnings go below the monthly threshold?

Thanks for your help.

[northernladuk]

You sure you have tried searching??

student loan site:forums.contractoruk.com/accounting-legal/ - Google Search

[Dinosaurobots]

You sure you have tried searching??

student loan site:forums.contractoruk.com/accounting-legal/ - Google Search

Definite. I used the site's own search rather than doing it through Google, and having looked through two pages of the results from your link, I can't see anything that seems to answer my question...

[MrRobin]

The answer is no, you cannot suspend your repayments through PAYE (since you're using an umbrella company) just because you might not be earning the same amount throughout the whole year. Each month, the payment is calculated in isolation -- i.e. it does not take into account whether you earnt £0 or £10000 the previous month.

If you earn less than £15,000 for the whole tax year then you can apply for a refund at the end of that year, but you can't apply for a partial refund because you paid, for example, £1,500 on £20,000 that you earnt in 3 months, rather than the £450 you would have paid if you earnt £20,000 over 12 months.

How repayments are calculated

Hovever, if you were comtracting though a limited company, then you repay your student loan through the self assessment so that takes the average of the whole year into account.

[Dinosaurobots]

The answer is no, you cannot suspend your repayments through PAYE (since you're using an umbrella company) just because you might not be earning the same amount throughout the whole year. Each month, the payment is calculated in isolation -- i.e. it does not take into account whether you earnt £0 or £10000 the previous month... [Edited for space]

Thanks Mr Robin, that's what I wanted to know. Much appreciated.