Self Assessment: accounting for Universal Credit, pension contributions and student loans on your tax return
If you’re preparing for the upcoming Self Assessment filing deadline of 31st January 2023, you may be wondering how to record certain types of incomings and outgoings on your 2021/22 tax return. Here’s how to account for Universal Credit, pension contributions and student loan repayments.
Universal Credit payments are not taxable, so if you receive these payments you do not need to record them on your Self Assessment tax return.
If you made personal pension contributions during the 2021/2022 tax year, you need to record these payments in the 'Tax reliefs' section of your Self Assessment tax return. Enter the total value of all the personal pension contributions you made during the tax year in the field marked 'Payments to registered pension schemes where basic-rate tax relief will be claimed by your pension provider'.
If you don’t earn income from employment
If you’re self-employed and you don’t earn additional income from employment, HMRC uses the information you provide on your Self Assessment tax return to determine the total value of the student and/or postgraduate loan repayments you’re required to make for the tax year in question.
If you file Self Assessment through FreeAgent or online via HMRC, choose ‘Yes’ in response to the question ‘Did you repay or were you due to repay a Student Loan or Postgraduate Loan?’ and then select the type of loan the repayments relate to (i.e. a student loan, a postgraduate loan or both).
If the repayments relate to either a student loan or a combination of student and postgraduate loans, you should select the relevant student loan plan type (1, 2 or 4). If the repayments only relate to a postgraduate loan, you should leave this section blank.
When you submit your completed tax return, HMRC will use this information to calculate the student loan repayments you’re required to make for the tax year in question. This amount will then be included in your annual tax bill. You can find out more in our guide to paying back your student loan when you’re self-employed.
If you earn income from employment
If you earn income from employment - either as a limited company director or as a sole trader who earns additional employment income - your student and/or postgraduate loan repayments are deducted from your salary automatically via PAYE. You need to provide HMRC with information about these repayments on your tax return.
If you file Self Assessment through FreeAgent or online via HMRC, begin by providing the information outlined in the section above. Then, in the ‘Fill in your return’ section of your tax return, record the total amount of student loan repayments that were made automatically via PAYE over the course of the tax year. Alternatively, if repayments were made for both student and postgraduate loans, you should record the total amount for each loan type separately in the relevant boxes. You can find these figures on your P60 or on each payslip for the tax year in question.
HMRC will check the amount you record in this section against the information that your employer submitted during the tax year via PAYE.
Whether you earn income from employment or not, if you complete a paper tax return you will need to provide the information relating to student loan repayments in a different area of the form.
Need more support as you prepare your 2021/22 tax return?
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Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this blog post. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.