⚠️ Our Tax Guide for Students guidance has moved to the LITRG website. If you are a student or have a student loan and have a query about any of the issues we cover in the section, please let us know by filling in the Contact Us form.
What happens with my student loan if I go abroad?
If you go abroad and are no longer within the UK tax system, HM Revenue & Customs (HMRC) stop being involved in your student loan repayments and the Student Loans Company (SLC) takes over.
I am going abroad, how will I repay my student loan?
If you secure employment abroad for more than three months and are paid abroad, the SLC will ask for the name of the employer and evidence of the salary. They will probably ask you to set up a direct debit repayment arrangement. The level of your repayment will depend on your overseas earnings.
However, the repayment threshold relevant to the country you are going to is not necessarily the same as the threshold in the UK (for the 2020/21 tax year these are £19,390 for Plan 1 income-contingent repayment student loans, £26,575 for Plan 2 income-contingent loans and £21,000 for postgraduate loans). Thresholds vary according to comparison calculations between the cost of living in the UK and the other country. GOV.UK gives the thresholds for Plan 1 loans, Plan 2 loans and postgraduate loans. The SLC uses the repayment thresholds over a 12-month period from when you are working abroad, so this may differ from the UK tax year (which runs from 6 April to 5 April).
What happens to my student loan repayments when I return to the UK?
If you have been away overseas and return to the UK for three months or more, you should let the Student Loans Company (SLC) know. This is important because if you find employment in the UK, you might need to start making Pay As You Earn (PAYE) repayments again and you will need to cancel any separate arrangements that you have made direct with the SLC.
If you have been abroad and then return to the UK, it is important to understand whether you have made overpayments on your loan. This situation can arise when you have been paying your loan repayments direct to the SLC and you are then asked by HMRC to complete a Self Assessment tax return. Your tax return will include all your worldwide income and your student loan repayments will be calculated on this income using the UK repayment thresholds and so will not automatically take into account the overseas repayments you have made directly to the SLC. If you are in this position and you do not want to make overpayments, you must contact the SLC to transfer the direct overseas repayments to HMRC and then apply to HMRC, using an informal ‘stand over’, to ensure overpayments are not deducted.
It is recommended that you check your loan account to ensure that all repayments have been accounted for (those made through the Self Assessment process to HMRC and those directly paid to the SLC).
You can find out more about working abroad temporarily elsewhere in our Going abroad pages.