If your income is over a certain threshold each year and you've a student loan outstanding, you have to make repayments of the loan. If you're in employment, it's usually dealt with via PAYE, but many people aren't in that position and have to make payment as a lump sum via their Self Assessment Tax Return - HMRC collect the payment as part of their January tax and NI payment and pass it on to the Student Loan Company. We've lots of clients in this position.
If you're late paying the tax and NI bill that's due in January, and still haven't paid it by the end of March, HMRC charge a 5% penalty.
We've a client who had no tax to pay in January, but did have a Student Loan repayment to make. He forgot to make it (despite our reminder, I should add!). HMRC then raised a notice demanding the 5% penalty on the late payment. But the late payment wasn't tax, it was a Student Loan. So we appealed against it - the penalty was about £100, so no disaster but worth questioning.
HMRC have cancelled the penalty, correctly, since there's been no late payment of tax or NI. It's interesting, though, that their system is evidently completely unable to identify what the late payment's made up of; it's based on the taxpayer's account as a whole. You wonder how many people have been penalised for a late Student Loan repayment and paid it without questioning it. Thousands? Look out if you're in that position, or you've clients in that position, anyway.
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