Changes to student loans repayments for the self-employed

The profits used to assess student loan repayments and entitlement to student finance will include transitional profits from basis period reform.

Student loan repayments for self-employed taxpayers

Your student loan repayments are based on the profits you report in each tax year. For tax years 2023-24 to 2027-28 this will be your normal profit, plus the portion of the transitional profits you decide to bring into that year.

Transitional profits are spread evenly over the five years by default. But you can choose to bring more than the minimum additional profit into any of the years.

The extra profit could cause a significant increase in your student loan repayments in one or all of the five years.

However, it might be possible to adjust the spreading of your transitional profits so that your income remains under the threshold for one or more of those years. There are many factors to consider when doing this, so give us a call and together we’ll calculate the best allocation for you.

Applying for student finance

If you’re self-employed and you’re planning to apply for student finance - a maintenance loan for your child, for example - your income will be taken into account.

Normally the assessment is based on the tax year two years before the application. But you can opt to use the current year figure, if you can show that your income has fallen by at least 15%.

An example…

If, because of basis period reform, the income you report in 2023-24 is 15% or more lower than in 2021-22, it would be better to use the current year amount for the student finance application.

If you need help to manage your student loan repayments or have questions about the student finance application process, please get in touch with our experts.