Archive for December, 2010

Student Loan over-repayment

As you might have heard on the news or read in this article, £15 million has been overpaid this year by former students repaying their student loan – because the repayments have continued to be taken even after the full amount of the loan has been paid back.

The problem occurs because although the Student Loans Company (SLC) has informed your employer through HMRC that you should have student loan deducted from your payslip each month, the SLC doesn’t know how much is being repaid until the end of the tax year when your employer files its tax return. As you’ll see on the About page of The Salary Calculator, student loans are repaid at a fixed rate of 9% of anything you earn over £15,000 – no matter how large (or small) the balance of the loan. If you are close to repaying the total of your loan, deductions may continue for some time until the SLC realise that you have overpaid – and even then, they have to communicate to HMRC who then pass the “stop” message on to your employer.

There are things you can do to help prevent overpayment, however. The Student Loan Repayment Portal (which appears currently to be unavailable) will show the last known balance of your account, and allows you to enter information from your payslips to estimate how much is outstanding. If you are close to repaying the full amount, you can contact the SLC directly and pay off the remaining balance by debit card over the phone. When you do this you will need to make sure that the stop notice makes its way from the SLC through HMRC to your employer – if not, you will find the deductions continue to be taken even though you have repaid the loan. You may be able to get the SLC to fax confirmation of the stop directly to your employer, making sure it arrives in time for your next payslip – if you speak to the SLC about repaying your loan, you can ask them about this and discuss it with your employer.

Alternatively, you can arrange for your remaining balance to be taken by Direct Debit rather than by PAYE deduction – meaning that when the balance has been repaid in full, the debits stop automatically. Again, the SLC need to send a “stop” note to HMRC and your employer, but this happens before the amount is repaid and therefore if something goes wrong you are less likely to be trying to get a refund.

If you are repaying your student loan and you think this may apply to you, check out the Repayment Portal I linked to above and see how much is still outstanding on your loan. I repaid my loan earlier this year and I can tell you it is a good feeling!

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Wednesday, December 15th, 2010 Student Loan 3 Comments

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20% VAT from 4th January 2011

As you are probably aware, in June this year the Chancellor announced in his emergency budget that VAT (Value Added Tax) would increase from 17.5% to 20% from the 4th January 2011. This will mean a small increase in the cost of most goods and services, as suppliers will have to increase the price they charge to cover the extra VAT they are having to pay to the Government.

Although a lot of people wait until the January sales before making a large purchase, in some cases you might find that it’s worthwhile to buy before the end of the year so that you only pay the lower 17.5% VAT. However, bear in mind that the amount of VAT increase is only small (a little over 2%) compared to the kind of discounts often offered in January sales.

For large purchases, such as a new car, the VAT increase could lead to a significant increase in price so it is worth checking what the VAT increase means for you. Fortunately, over at our sister site The VAT Calculator we have created a simple tool that shows you how much more something will cost if you buy it after the VAT increase. Just enter the current cost (including VAT) and see what the cost changes to with 20% VAT – try out the 20% VAT comparison calculator.

You can learn more about VAT by reading the information here.

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Sunday, December 5th, 2010 About The Salary Calculator No Comments

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