If you have a UK student loan, there are some important points you need to keep in mind as there will be implications on your personal tax liability.
Student loan repayments will start on the 6th of April after you leave your course. You are required to pay 9% of your income towards your student loan, once your total gross income for the tax year exceeds £15,000. As most of our clients are a Director of their limited company and required to complete a personal self assessment tax return, the student loan repayments will be calculated when you complete your personal tax return for the year. You will be required to make the payment to the HMRC and they will forward this to the Student Loans company. An example of how this could impact on you is as follows:
If you gross earnings for the year are £40,000 (from dividends and salary through your limited company)
- £40,000 – £15,000 = £25,000 (earnings over the repayment threshold)
- £25,000 x 9% = £2,250 (approximate student loan repayment required based on earnings of £40,000)
So, in this situation you would be required to pay £2,250 towards your student loan. As this a personal repayment, the money must be paid from your personal bank account, not your company bank account.