Does Student Finance Affect Tax Credits?

Students who are receiving student finance may wonder how it will affect their Tax Credits claim. If you are one of them, you will find the answer to your question as we discuss whether or not student finance affects Tax Credits payments for students in the following blog post. Additionally, we will also explore what is considered income for your Tax Credits claim and what steps you should take if you think there is a mistake in your payments. 

Does Student Finance Affect Tax Credits?

The answer to whether or not student finance affects Tax Credits depends on what type of finance the student is receiving. Student loans do not count as income for your Tax Credits claim; while grants do count as income for your Tax Credits claim.

Student loans are given by the government to students who are attending college or university. The loans are interest-free and have to be repaid after graduation. Grants are also given by the government, but they do not have to be repaid.

Since student loans are not included as income when calculating your Tax Credits claim, you can receive the full amount of Tax Credits you are entitled to. However, certain types of student loans can be considered as income (wholly or partially) during your means test for a Tax Credits claim.

Students loans that affect your Tax Credits claim include the following:

• Maintenance loan
• Postgraduate students loan
• Professional and career development loan
• NHS Bursary or Teachers training bursary

However, it is important to note that if you work while receiving your student loan, any income from your job may be counted as income for your Tax Credits claim. 

This means that if you have a part-time job, your Tax Credits claim may be affected by your earnings from that job. It is always a good idea to keep HMRC informed about any changes in your income, including student loan payments, to ensure that you are receiving the correct amount of tax credits. 

There are other important considerations to keep in mind when it comes to the interaction between student finance and Tax Credits. For example, if a student takes a break from their studies or drops out of their course, they may no longer be eligible for student finance. This could impact their income, and in turn, their eligibility for tax credits.

Additionally, if a student’s circumstances change during the course of their studies; for example, if they have a child or start working, this could impact their eligibility for both student finance and Tax Credits.

What Counts As Income For Your Tax Credits Claim?

Various types of income are considered when calculating your Tax Credits claim. These include earnings from the following sources: 

• employment 
• self-employment 
• pension 
• rental income 
• benefits

As mentioned earlier, grants received from the government are also counted as income for your Tax Credits claim. This means that any grants received by students, such as the maintenance grant, will be considered income. 

It is important to make sure that you are providing accurate information to HMRC when submitting your Tax Credits claim. Failure to report all sources of income could result in you receiving an incorrect amount of Tax Credits. 

What Can You Do If You Think You’re Not Getting The Right Amount Of Tax Credits?

If you think that you are not receiving the correct amount of Tax Credits, you can contact HMRC to challenge your award decision. You can do this by calling the Tax Credits helpline at 0345 300 3900 or contacting the Tax Credits general enquiries department online. 

When contacting HMRC, be sure to provide accurate and detailed information about your income and circumstances. HMRC will review your claim and let you know if any adjustments need to be made. 

It is important to keep in mind that if you fail to report any changes in your income or circumstances, you may be required to repay any overpayments that you received from HMRC. 

Conclusion:

In conclusion, student loans do not affect your tax credits claim, but grants received by students are counted as income. It is important to keep HMRC informed about any changes in your income or circumstances to ensure that you are receiving the correct amount of tax credits. If you think you are not receiving the right amount of tax credits, contact HMRC to challenge your award decision.

References:

How does student support affect tax credits? – Turn2us

Does a Student Loan Count as Income in the UK?

Benefits and tax credits while you’re studying | Gingerbread