HMRC error means thousands overpaying student loans - how to get refund

An mistake by HMRC has resulted successful thousands of graduates being overcharged for their pupil indebtedness repayments.

It is estimated that astir 16,000 individuals with pupil loans person paid importantly much than required, owed to an contented initially identified by the taxation bureau past year.

This occupation impacts those who wage their taxes via self-assessment and besides person benefits successful benignant from their employers, similar backstage wellness security oregon institution cars.

The occupation comes arsenic HMRC's self-assessment incorrectly includes these payrolled benefits erstwhile calculating someone's pupil indebtedness deductions, starring to overpayment.

The taxation bureau states connected its website: "Currently, our self-assessment strategy is not capable to archer the quality betwixt these payrolled benefits successful benignant and the remainder of the PAYE income. As a result, these are included successful the pupil indebtedness and postgraduate repayments calculations."

Paul Slokan, of accountancy steadfast RSM, said: “As much employers person moved to payrolling benefits, it has go evident that determination is an contented successful the self-assessment strategy for those with pupil and postgraduate loans.

"Loan deductions are not owed connected payrolled benefits successful benignant that are not taxable to Class 1 National Insurance. As a result, a postgraduate earning £50,000 could beryllium overcharged astir £600 successful 1 year."

A glitch has been identified wherever a idiosyncratic with a £50,000 salary, a institution car payment valued astatine £5,000, and backstage aesculapian security worthy £1,500 should person their pupil indebtedness deductions based solely connected their salary.

However, RSM has highlighted that HMRC's self-assessment strategy erroneously computes the pupil indebtedness repayments connected an income of £56,500, arsenic reported by the Mirror.

RSM warns that astir pupil loans person a 9% repayment rate, meaning idiosyncratic connected a £50,000 wage could overpay by £585, a fig acold exceeding HMRC's mean overpayment assertion of conscionable £44. Paul mentioned: "Whilst the magnitude tin yet beryllium recovered, it is simply a cashflow contented that galore graduates could bash without."

HMRC issued guidance connected its tract until a imperishable hole is made. But, arsenic Paul states, this lone helps if taxpayers are alert of the problem, which is not often the case. He continued: "Twelve months seems to beryllium a tenable magnitude of clip for HMRC to find a imperishable hole to the problem". A solution is expected by April 2025 from HMRC.

The Association of Taxation Technicians (ATT) highlighted successful October that an estimated 16,000 pupil indebtedness payers person overpaid owed to this mishap. ATT's Helen Thornley chipped in: "It's important that anyone who completes a self-assessment return, has employment income and receives benefits specified arsenic a car oregon backstage aesculapian insurance, wherever their leader has taxed them by including the worth of the payment successful the payroll, is alert of the workaround.

"Otherwise, they volition extremity up overpaying their pupil indebtedness and person to hold for HMRC to interaction them to put a refund. Unless HMRC is capable to alteration their systems, this volition go much of a occupation successful aboriginal years arsenic payrolling of benefits becomes mandatory from April 2026."

A typical from HMRC stated: "We've written to those affected to apologise, connection a refund and supply a impermanent solution truthful no-one is near retired of pocket. A imperishable solution volition instrumentality effect from April 2025."