The scale of the overpayment issue
Between 2009-10 and 2017-18, the Government body in charge of student finance took £308 million more in Student Loans repayments than it should have, according to reports.
As Student Loan repayments are deducted at source, and can often be spread across many months, it’s not easy to ascertain how much has been paid over time. It might be worth taking a closer look at what you’ve been paying, as it recently came to light in March 2020 that there’s a £28.5million unclaimed overpayment Student Loans pot belonging to graduates.
How did this happen?
Sometimes the reasons may be purely administrative- end of course dates may have been erroneously set up with HMRC, or employers simply began taking Student Loan repayments too soon.
Graduates will often make arrangements to repay Student Loans from their salary when they meet the annual salary repayment threshold- currently £26,575 (this threshold will increase to £27,295 effective from April 2021). Therefore while graduates may repay their student debt in its entirety part way through a tax year they will continue to make repayments until the end of that tax year as information is typically not refreshed until the year end.
While in the 12 months’ before the debt is repaid the Student Loans Company will write to graduates and encourage a direct debit to be set up to prevent an overpayment often graduates will have left former addresses. Another common reason for overpayments is that repayments are taken monthly but if earnings do not reach the annual salary repayment threshold then a repayment may be due. So if a graduate repays £500 in the tax year 2020/21 but did not reach the annual salary repayment threshold of £26,575 they will be entitled to a refund.
How do I claim?
While data sharing between HMRC and the Student Loans Company has improved the situation in the last year or so, if you made repayments between 2009-10 and 2017-18 then your repayments may have continued after your debt was repaid. Average overpayments have been assessed in the sum of around £600.
You can contact the Student Loans company to seek a refund. It might be helpful to look at historic payslips and tax forms received from your employer so you know how much you have repaid to date. Your payroll reference might help also.
Claiming should be a straightforward exercise you can carry out yourself without paying a third party to help you.