In the Know: How do I pay off my student loan as a contractor?
Published on Wednesday, April 2, 2014
Student loans are the one sore point of spending three plus years studying hard at University. Paying it back is also a drawn out process, with 9% of a permanent employee’s salary going to the student loan company once you earn over £16,910 (£21,000 if your course starts in September 2012).
So what about contractors with a limited company who have a student loan?
Unfortunately, there’s no student loan fairy that takes out the 9% of the loan for you. When you’re a limited company contractor, this 9% needs to be paid at the end of the tax year in one lump sum (so planning ahead is critical).
This is done by adding up your salary, dividends and any other personal income, to which you’ll pay back 9% of your total income, once your Personal Tax Return is completed.
The updated version of this article is here How do I pay my student loan when contracting?
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