Can student finance take money that is given as a gift every month?
Posted by saplingsri@reddit | AskUK | View on Reddit | 15 comments
[removed]
Posted by saplingsri@reddit | AskUK | View on Reddit | 15 comments
[removed]
L-0-T-H-0-S@reddit
According to the Gov.uk website - Student Finance generally can't take money from gifts because they do not count as taxable earned income. However, when you are abroad, the Student Loans Company requires you to prove how you are supporting yourself.
If they identify regular payments, they may classify them as third-party support, which can sometimes be treated as "income" for repayment purposes if it exceeds the threshold for your specific repayment plan.
saplingsri@reddit (OP)
Thank you so much!
I am on plan 2, never earnt enough to pay back
Say if I got 1500 a month and recieved two lump sums of say 20k would this count as income all together? Do you know where to find more info on that please? :)
L-0-T-H-0-S@reddit
It depends on how you receive the 20k. Your actual £1,500 a month (as you probably know) is below the income threshold. Student loan repayments are calculated on a "per pay period" basis. A large payment in one month doesn't (or shouldn't) affect the months where you earn below the threshold. If the 20k is a gift, inheritance, or even from your own savings, it is not considered "earnings."
However - if your getting these "gifts" regularly at these amounts - they are going to look at that as backdoor income and leave it to you to prove they aren't. That should be fairly straight forward, all you have to do is provide copies of the paperwork showing where the money came from - bank statements from yours and your grandmother's accounts for verification should be more than sufficient.
You also have to bear in mind, while the gift itself is not income, any profit or interest you make from that gift is, you have to add it to your income calculation.
If you receive more than £2,000 in total unearned income (e.g., interest from savings, property income, etc) in a tax year, it must be reported via self-assessment, and it may be included in the student loan repayment calculation.
In summary - The £20,000 is safe from deductions, but ensure the source is documented, and be aware of potential tax or repayment implications on any interest it earns. As is, you should be fine but if these gifts carry on at this level - it becomes difficult to not view that as backdoor income. so be very, very careful with paperwork here - make sure everything's clearly accounted for.
saplingsri@reddit (OP)
Legend! Thank you for the information and your time much appreciated
L-0-T-H-0-S@reddit
Happy to help.
BlueFlamingoes@reddit
If its enough money for SF to be interested i would also worry about tax.
LetsAdultTogether@reddit
Lol ignore this OP. You do not pay tax on money sent from your granny! - signed: someone that used to work in tax
saplingsri@reddit (OP)
Thank you!! It's all legit haha
ThrowRAkitty13@reddit
The only tax to be considered is inheritance tax on these gifts but that's only an issue if you're grandmother dies within 7 years of giving the money, but even then any tax should be paid out of her remaining estate if there is any needed to be paid in the first place. If the estate can't cover the tax then it would pass onto whoever received the gifted money to pay the appropriate amount of tax.
ThrowRAkitty13@reddit
The tax would only be an issue if grandmother dies with 7 years.
ThrowRAkitty13@reddit
Only income counts, a gift is not income and it doesn't matter if you're using it for loving expenses or not. They are likely trying to deduce that the money from your grandmother is just a gift and not that you're trying to circumvent the system by not declaring any income from a job and claiming it's a gift instead.
saplingsri@reddit (OP)
Thank you so much! :)
Severe_Mastodon8072@reddit
Hey! Student loan repayments are only taken from earned income, not from gifts.
Just give them the evidence that shows it’s a gift rather than a salary :)
saplingsri@reddit (OP)
Thank you so much! :)
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