Graduate Woes: Student Loans Are About To Get More Expensive For Self-Employed Professionals

Our Reviews

4.9 / 5 Based on 605 Reviews
Read all reviews »
Share
Tweet
Share
Share

Still paying off your uni days? There may be some bad news on the horizon with student loans set to become even more expensive by the autumn. Last year, graduates were dealt a heavy blow when interest rates on student loans were hiked up from 4.6% an eye-watering 6.1%.

Not content to leave it there, BBC News reports that the government have announced a further increase, to 6.3%, due to take effect in September. Though Downing Street insists the hike is in line with inflation, that isn’t likely to soften the blow for self-employed professionals who are likely to be among the hardest hit.

 

student loans increasing self employed professionals

Student loans & self-assessment

Under the present system, sole traders who pay their tax through the Self-Assessment system also pay student loans through that system. The repayments that self-employed graduates need to make is worked out depending on when the loan was originally taken out.

For Plan 1 and Plan 2 loans, the repayment rate is 9% of their income above a set threshold – which is £18,330 per annum for Plan 1s and £25,000 per annum for Plan 2s.

 

student loans increasing self employed professionals

New proposals for taxpayers

Even at the current level, student loan repayments can significantly increase the amount self-employed professionals pay through self-assessment.

For those affected by the increase, that amount is only going to rise further, though there is the possibility that these repayments can be made in smaller, more frequent instalments rather than the large bill sole traders are lumbered with at the end of each tax year.

Last year, the government announced plans to replace the yearly self-assessment with quarterly tax returns. However, this made a lot of people very angry, so those plans were quickly scrapped.

Undeterred, the Conservatives are still planning to give more frequent VAT returns a test-run. Experts say this could well lead to mandatory quarterly reporting coming in after all.

 

student loans increasing self employed professionals

Will the student loan interest rate increase affect you?

On a brighter note for some, the hike to 6.3% interest rates isn’t going to affect all graduates – only those who started uni after 2012, and only those earning a certain amount.

If you started university after 2012 and currently earn £45,000 or more then, yes, you will be paying the full 6.3% from September. However, if you earn anywhere between £25,000 and £45,000, then your interest rates will be based on a sliding scale between 3.3% and 6.3%.

 

Does the student loan increase affect you as a self-employed tradesman? Join in the discussion on Facebook or Twitter, or share your thoughts with us in the comments below.

Tradesman Saver also provides insurance for tradesmen covering a wide variety of professions, as well as insurance for self-employed professionals. For further information, please see our Tradesman InsuranceSelf-Employed  Insurance or Who We Cover pages.

Related Articles:

Are you protecting your business?

As one of the fastest growing insurance schemes for tradesmen and professionals, we know a thing or two about what makes a great insurance policy. That's why we include FREE Legal Expenses Insurance on every policy we offer. But don't take our word for it - build your personalised quote online and see what we can do for you.
Get A Quote

Leave a comment

*

*

Our Reviews

4.9 / 5 Based on 605 Reviews
Read all reviews »

Very quick, easy process, very competitive price.

3 hours ago

straight forward easy to fill application/ compared to other companies i enquired at. Instant quote , all... Read more »

20 hours ago

A very good website to do what you want to do; very pleased with my quote, thank you, Michael

on Oct 13th
© Copyright 2018 Tradesman Saver | Tradesman Saver is a product of Henry Seymour & Co (Barkdene Ltd) which is authorised and regulated by the Financial Conduct Authority.
Registered in England No 1842617 Insurance Brokers. All rights reserved.
Get a Quote