I know that a lot of Students leave University and become Self-Employed using the skills they gained from their qualifications, but many post-graduates ask me how their Student Loan Repayments are going to work when they become self employed.
…Will it come out monthly? …How much do I repay? …Will they just forget about it (ahem)?
Well it’s pretty straightforward really, you don’t pay it monthly as though you were in full-time employment – the amount you need to pay for your student loan will simply be added to the amount you owe on your Tax Return at the end of each financial year.
There are a few areas to bear in mind however:
1) You MUST tick the box on your Tax Return informing the HMRC that you need to pay back a student loan. If you don’t they will eventually find out and backdate you all of the amount you should have paid.
2) The amount you pay back will differ depending on which Plan (1 or 2) you are on – if you’re not sure which plan you’re on read my other blog here
• If you’re on Plan 1 you only pay back your Student Loan if you earn over £17,335
• If you’re on Plan 2 you only pay back your Student Loan if you earn over £21,000
3) Interest will automatically be added to your loan amount which you can find out from the company which gave you your Student Loan
4) Keep an eye on your business forecast and income projections – if it looks like you’re going to be over your repayment threshold then I would strongly recommend putting the money aside (on top of the Tax that you’re already putting aside) each month as though you were employed full-time so that you don’t have such a big hit of money going out at the end of each financial year.
I hope that helps and if you want anymore information just contact me at firstname.lastname@example.org
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