Student loan and PAYE Student loan and PAYE
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  1. #1

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    Default Student loan and PAYE

    I'm probably misunderstanding how PAYE works but here's my question anyway.

    Up until a few weeks ago I was paying off my student loan via PAYE. As I got the letter from SLC suggesting switching to direct debit as I was close to paying it off I set this up with them and they informed my umbrella to stop taking payments.

    Now I'm finding I'm paying no student loan but more PAYE. Roughly the same amount extra that the loan payment was.

    Am I wrong for thinking I'd be paying the same amount of PAYE?

    Thanks in advance.

    Paul.

  2. #2

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    Have you spoken to your employer?
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  3. #3

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    Quote Originally Posted by codedbypaul View Post
    I'm probably misunderstanding how PAYE works but here's my question anyway.

    Up until a few weeks ago I was paying off my student loan via PAYE. As I got the letter from SLC suggesting switching to direct debit as I was close to paying it off I set this up with them and they informed my umbrella to stop taking payments.

    Now I'm finding I'm paying no student loan but more PAYE. Roughly the same amount extra that the loan payment was.

    Am I wrong for thinking I'd be paying the same amount of PAYE?

    Thanks in advance.

    Paul.

    As far as I know the student loan is repyed after PAYE tax has been paid so the tax element should not have changed. Has your tax code changed? Has some numpty put you on an emergency tax code?

    What does your umbrella company say?

  4. #4

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    Quote Originally Posted by BlueSharp View Post
    As far as I know the student loan is repaid after PAYE tax has been paid so the tax element should not have changed. Has your tax code changed? Has some numpty put you on an emergency tax code?
    As far as I can see my tax code is still the same. I'm thinking I'm now paying too much PAYE or I wasn't paying enough before.

    Quote Originally Posted by BlueSharp View Post
    What does your umbrella company say?
    I've emailed them about it but haven't yet had a reply. To be honest the service I've been getting from them has being going downhill this year.

  5. #5

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    Hi Paul, I have PMd you, so it now looks like your salary has increased and therefore your earnings will be taxed on a higher figure increasing your tax take.
    Last edited by lucyclarityumbrella; 14th October 2019 at 12:16.

  6. #6

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    Quote Originally Posted by midlandlass View Post
    Hi Paul, I have PMd you, but in essence the student loan is taken pre tax, so it now looks like your salary has increased and therefore your earnings will be taxed on a higher figure increasing your tax take.
    Hmm. Every tax calculator I've tried gives the same amount for tax payable regardless of whether the student loan deduction is ticked or not. It seems after speaking to them the software is instead adding the student loan amount to my tax payable.

  7. #7

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    Sorry should have explained it in more detail... the calculation of the deduction is based on the gross pay (before tax and NI) for the pay period and no deduction will be made if the statutory threshold is not exceeded. The actual deduction is made from the net pay after tax and national insurance has been calculated and deducted.

  8. #8

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    Quote Originally Posted by midlandlass View Post
    Sorry should have explained it in more detail... the calculation of the deduction is based on the gross pay (before tax and NI) for the pay period and no deduction will be made if the statutory threshold is not exceeded. The actual deduction is made from the net pay after tax and national insurance has been calculated and deducted.
    We got to the bottom of it in the end. It was due to the fact I switched from both monthly to weekly payments and then to removing the student loan deductions quite close together. It made it look like more tax was being take when in reality had I not stopped the loan deductions the amount of PAYE would have been the same anyway.

  9. #9

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    Quote Originally Posted by codedbypaul View Post
    We got to the bottom of it in the end. It was due to the fact I switched from both monthly to weekly payments and then to removing the student loan deductions quite close together. It made it look like more tax was being take when in reality had I not stopped the loan deductions the amount of PAYE would have been the same anyway.
    Glad it got sorted in the end for you

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