Student loan repayments under Making Tax Digital for Income Tax

HMRC has clarified how Student Loan and Postgraduate Loan repayments are calculated for borrowers using Making Tax Digital (MTD) for Income Tax. When a client's income exceeds the relevant threshold, MTD quarterly updates will generate an estimated repayment amount based on the borrower's plan type.

What it means for a practice

• Estimated loan repayments generated through MTD quarterly updates are not payable during the tax year.
• The final repayment liability is calculated only through the Self Assessment tax return.
• Practices should note that the final total tax liability, including these student loan repayments, remains due by 31 January following the end of the tax year.
• Be aware that calculations for self-employed clients exclude certain unearned income under £2,000 and income relieved by specific losses or annuities.