Author: cigma

Student Loans are part of the government's financial support package for students in higher education in the UK. They are available to help students meet their expenses while they are studying, and it is HMRC’s responsibility to collect repayments where the borrower is working in the UK. The Student Loans Company (SLC) is directly responsible for collecting the loans of borrowers outside the UK tax system.

The main finance package elements available to students include loans for tuition fees and maintenance loans (to help with living costs). The maximum loan amounts are capped with the maximum amount depending on a student’s circumstances. Maintenance grants are also available under certain circumstances. The grants do not have to be repaid but do reduce the amount of available maintenance loan a student can claim.

Students that have finished their studies and entered the workforce must begin to make loan repayments from the April after they have finished their studies or when their income exceeds an annual threshold.

Since 6 April 2023, the thresholds and rates are as follows: Plan 1 – £22,015, Plan 2 – £27,295 and Plan 4 (Scottish student loans) – £27,660. The terms of loan repayment for courses of study started before 01 September 2012 are referred to as 'Plan 1', and those started after 01 September 2012, are referred to as 'Plan 2'. Repayments will be deducted at a rate of 9% of income over the threshold. The threshold for postgraduate loans is £21,000 and repayments are deducted at a rate of 6%

Taxpayers that have made repayments but whose total annual income was less than the respective thresholds can apply for a student loan refund. An application cannot be made until after the relevant tax year has finished. Taxpayers can also apply for a refund from the Student Loans Company if the loan debt has been repaid in full.

The Student Loans Company repayment call waiting times are currently far longer than usual due to exceptionally high volumes of refund requests. Taxpayers should first check if they are due a refund by looking at https://www.gov.uk/repaying-your-student-loan/getting-a-refund

The Help to Save scheme is intended to help those on low incomes to boost their savings. Eligible users of the scheme can save between £1 and £50 every calendar month and receive a 50% government bonus. The 50% bonus is payable at the end of the second and fourth years and is based on how much account holders have saved. The bonus is paid directly into the account holder’s chosen bank account.

This means that account holders on low incomes can receive a maximum bonus of up to £1,200 on savings of £2,400 for 4 years from the date the account is opened. The scheme is open to most working people who receive Working Tax Credits or Universal Credit.

Almost 450,000 people have opened Help to Save accounts since the scheme was launched in September 2018 and March 2023, with nearly £372.5 million paid into accounts during that time. This has seen the government award £146 million in bonus payments.

The scheme had been due to end in September 2023 but was extended by 18 months, until April 2025. The extension was announced at Spring Budget on 15 March 2023.

A trust is an obligation that binds a trustee, an individual or a company to deal with the trust assets, such as land, money and shares, and which form part of the trust. The person who places assets into a trust is known as a settlor and the trust is for the benefit of one or more 'beneficiaries'.

The trustees make decisions about how the assets in the trust are to be managed, transferred or held back for the future use of the beneficiaries. They are also responsible for reporting and paying tax on behalf of the trust. A trust needs to be registered with HMRC if it pays or owes tax.

Different types of trust income have different rates of Income Tax. For example, in respect of accumulation or discretionary trusts the trustees are responsible for paying tax on income received. The first £1,000 is taxed at the standard rate. For trust income over £1,000, the rate is 39.35% for dividend-type income and 45% for all other income.

With reference to interest in possession trusts, the trustees are also responsible for paying tax on income received. The rate is 8.75% for dividend-type income and 20% for all other income.

There are also different rules for bare trusts, settlor-interested trusts and other types of trusts. It is therefore important that the Income Tax rules are considered at the outset as well as the CGT implications of the various types of trusts.

The replacement of domestic items relief enables landlords to claim tax relief when they replace movable furniture, furnishings, household appliances and kitchenware in a rental property. The allowance is available for the cost of domestic items such as free- standing wardrobes, curtains, carpets, televisions, fridges and crockery.

The amount of the deduction is based on:

• the cost of the new replacement item, limited to the cost of an equivalent item if it represents an improvement on the old item (beyond the reasonable modern equivalent); plus
• the incidental costs of disposing of the old item or acquiring the replacement; and
• less any amounts received on disposal of the old item.

There is an important distinction between deciding whether or not a new item represents a replacement or an improvement. Where the new item is an improvement on the old item the allowable deduction is limited to the cost of purchasing an equivalent of the original item.

HMRC’s internal guidance provides an example highlighting the fact that a brand new budget washing machine costing circa £200 is not an improvement over a 5 year old washing machine that cost £200 at the time of purchase (or slightly less, taking inflation into account).

However, if a replacement item is for a reasonable modern equivalent for example a new energy efficient fridge replacing an old fridge this is not considered an improvement and the full cost of the new item is eligible for relief.

The Economic Operators' Registration and Identification System (EORI) was setup as a European Union (EU) wide initiative that helps businesses communicate with customs officials when they are importing and exporting goods. The EORI allows businesses to provide pre-arrival/pre-departure information for goods.

Businesses in the UK are still usually required to hold an EORI number for the movement of goods in the following scenarios:

• between Great Britain (England, Scotland and Wales) or the Isle of Man and any other country (including the EU);
• between Great Britain and Northern Ireland;
• between Great Britain and the Channel Islands; and
• between Northern Ireland and countries outside the EU.

Which type of EORI number you need and where you get it from depends on where you are moving goods to and from. You may need more than one. If you move goods to or from Great Britain, you must get an EORI number that starts with GB. Most are then followed by a 12-digit number based on the businesses VAT number. 

You may also need an EORI number starting with XI if you move goods to or from Northern Ireland. If a business is making declarations or applying for a customs decision in the EU, then they may need an EU EORI number from an EU country.

You do not need an EORI number if you are moving goods that are both:

• not controlled goods; or
• for personal use only.