Erudio student loan deferral and Car Salary Sacrifice

[dick75]

Hi all, new to the forum so sorry if this is in the wrong place. Long time lurker on the forum , seems like a fantastic community and happy to be part of it.

I am attempting to defer my old style mortgage-type ERUDIO student loan. ( not the newer income contingent loans )

I am signed up to a salary sacrifice car scheme at work. My understanding is that Student loan repayments are based on gross pay which reduces as a result of the salary sacrifice scheme. In my case my gross pay is pushed below the deferment threshold and my thinking is they should use this 'reduced' gross when deciding my entitlement to defer.

I sent off the deferral pack with all supporting evidence but Erudio wrote back claiming I had told them about my NET salary and i must now confirm my GROSS salary by providing the past three months wage slips. This is bizarre because I didn't mention NET salary and I provided the past SIX months wage slips which clearly show the 'reduced' GROSS salary due to being on the salary sacrifice scheme.

I'm now doubting my understanding of the situation. Does anyone know if they will use the 'reduced' gross salary when deciding my entitlement to defer or do they base it on my original salary before any salary sacrifice. Bear in mind a salary sacrifice is not a deduction, it is an agreement to forgo part of my salary.

Any advice on how to proceed greatly appreciated.

Many thanks

[stevemLS]

Re: Erudio student loan deferral and Car Salary Sacrifice

The deferment guide is silent on this but it does refer to childcare vouchers which also operate on a salary sacrifice basis and says your earnings must be your gross salary before deductions for the vouchers. http://www.erudiostudentloans.co.uk/...-formright.pdf

I think you need to declare the higher amount.

[dick75]

Re: Erudio student loan deferral and Car Salary Sacrifice

The deferment guide is silent on this but it does refer to childcare vouchers which also operate on a salary sacrifice basis and says your earnings must be your gross salary before deductions for the vouchers. http://www.erudiostudentloans.co.uk/...-formright.pdf

I think you need to declare the higher amount.

Thanks, very helpful.

I wonder, are childcare vouchers ALWAYS deducted via the salary sacrifice method though? If so then I think I will have to pay but if not I may still have room to argue and it may be to my advantage that their terms and conditions are silent on the matter. There is a difference between a straightforward deduction such as tax or a standard pension contribution, and a salary sacrifice where the terms of my contract have been altered and I am paid less.

I found this link:

http://www.tamesidehospital.nhs.uk/d...SchemeFAQs.pdf

'Is there any impact on student loans?If you have a student loan it is recovered at a rate of 9% on gross annual earnings above£16,910 (the earnings threshold). Under a salary sacrifice arrangement you are agreeing toreduce your gross salary. This will result in a reduction in the amount of your student loanrecovery where your gross earnings before the salary sacrifice are above the earningsthreshold. If after taking into the salary sacrifice arrangements your gross earnings fall below£16,910 no deductions for student loans will be made.'

The above information relates to the income contingent loans but surely it can also apply to the 'Mortgage Style' loans.

Will be fun to challenge them on this whatever the outcome.

[stevemLS]

Re: Erudio student loan deferral and Car Salary Sacrifice

According to the MSE guide to childcare vouchers it is a salary sacrifice scheme.

There are loads of examples where different state organs deal with matters differently. What is not income for council tax reduction is for tax credits - the list of discrepancies is long.

You could always ask then!

[dick75]

Re: Erudio student loan deferral and Car Salary Sacrifice

Yes, looking into it I can see the vouchers do operate on a salary sacrifice basis.

Again though, looking at this link it says that for income contingent loans the amount payable will reduce under the childcare voucher scheme.

http://www.hr.qmul.ac.uk/docs/pay/2609.pdf

'I am currently paying back a student loan which is 9% on my earningsover £15k. Will this alter?A) Yes, it will alter as the trigger point is based on the salary on which you areliable to pay NIC contributions. Under the childcare vouchers scheme yourtotal gross salary on which NIC is paid will reduce, hence your loanrepayments will decrease.'

I will email them and they will at least have to justify why their definition of Gross Salary is different to the income contingent loans.

[stevemLS]

Re: Erudio student loan deferral and Car Salary Sacrifice

That is the only way you will get a definitive answer.

I can see that their treatment of salary sacrifices may be different for determining payment levels and eligibility for deferment.

Let us know the outcome.