HMRC isyet to resolve an issue affecting graduates with student loans who complete self assessment and receive benefits-in-kind (BIKs). This problem, identified over a year ago, has led to some taxpayers being overcharged on their student loan repayments.
The issue impacts taxpayers in self assessment who are repaying a student loan and receive payrolled BIKs that are not subject to Class 1 National Insurance contributions (NICs). HMRC acknowledged the problem in September last year, explaining that the self assessment system cannot distinguish between income exempt from Class 1 NICs and regular PAYE income.
Despite assurances that a fix was in progress, HMRC has yet to resolve the issue. In the meantime, taxpayers are advised to continue using the workaround provided by HMRC.
For those affected, the workaround applies to student loan holders in self assessment who receive BIKs from their employer, such as private healthcare, dental, or optical benefits, or participate in the cycle-to-work scheme. To calculate the value of BIKs, taxpayers should refer to their P60 form, which is issued by employers by 31 May following the end of the tax year.
The Institute of Chartered Accountants in England and Wales (ICAEW) has warned that the issue remains unresolved and advises taxpayers to follow HMRC’s guidance until further notice.
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