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There is no penalty for paying all or some of your loan off early.If you are self-employed, HMRC will work out how much you repay from your tax return.If you think you are coming close to the end of your payments then check your latest P60 and your student loan account; you may be able to switch your payment to Direct Debit so you can control your final payments.Contractors who have received disguised remuneration loans in the past could find themselves liable for retrospective tax charges if a new Government proposal is implemented.Any attempt to regain tax payments will need to be made through a tax tribunal.Kirk warns that the aggressive new measures could result in many former contractors going bankrupt, and argues that HMRC should instead be targeting advisers who sold the loan schemes to the contractors.You should know the plan that you are on from your student finance statements.
Disguised remuneration loans typically come in two forms.
For student finance taken out after September 2016, there is no longer a maintenance grant.
You get the same amount of money, or perhaps more, but it all comes as a maintenance loan which you will have to pay back.
Employee benefit trust (EBT) loans have been used by limited company contractors to extract money from their companies without paying high rates of income tax and have been circulating since the 1980s.
Contractor loans have been popular since 2000 and involve an individual receiving a loan and a small salary from an ’employer‘, often based offshore.