SLC form: what does Adjusted Taxable Profit mean, please?

[ALoanAndConfused]

Hi,

I am completing my PR2 form, confirming the income for 20/21 as I applied for a current year assessment for the Yr One Student Loan. 20/21 was my first ever year as a freelancer and I have not done my tax return yet, so need to complete this form.

It asks for my Adjusted Taxable Profits from Businesses, which I assume is my self-employed / freelance work?

But what does this mean? What is the adjustment, what counts as taxable and what as profit?

Do I deduct the expenses that I will eventually claim against tax?
Do I deduct my personal tax allowance as that is not 'taxable'?

I have called the SLC Helpline - they said they do not know and the question is too specialised for them.

Thank you!

Anyone?

It’s the profit your business made. So profit less expenses. They have specified adjustable profit because when completing financial accounts your company profit might not match your profit on your tax form. Without being cruel this is pretty basic and I would recommend using an accountant if your aren’t familiar with all of this!

*profit = turnover less expenses I mean!

Thank you!

I will use an accountant when doing my self-assessment, I think - though my income hasn't been high...I am not used to the language as I have never been self-employed before.

I know you say you will use an accountant, but I would just like to say that you can phone the HMRC, and I've found them very helpful answering questions in the past. Much better than the SLC Helpline!

I’ve had to do this OP for the same reason. I told them how much I earned after my expenses were deducted - SLC will take into account any tax deductions as my husband enters his from his P60 before any tax deductions are made. Hope this is helpful.

@ALoanAndConfused you really don’t need an accountant if you have simple ins and outs - I do a job, get paid for my time or I provide a service (which involves materials) and get paid for that, mine is really no more complicated than that.

@WinterIsGone is right HMRC are very helpful. If you are methodical when going through the self-assessment it’s quite self explanatory

Self assessment is easy, OP. SLC forms are far more complicated!

Winter , NotSorry and Cheshirecat - THANK YOU!

I am so pleased that the self-assessment will be easier.

I was filling in the form to confirm my income from last year because I had had to ask for a Current Year Assessment.

I now can't work out whether I have to do another form for education year 21/22 because my income will have dropped a lot more than 15% on last year's current year assessment. But when I logged into my SLC account it said no more information was required from me.

The helpline are utterly useless. The man I spoke to (he honestly sounded like a work experience person) could not even tell me whether my ExDP, father, now living at another address, would be part of the assessment for 21/22, or just me because my DC lives with me.

Has your DC filled in their application for 21/22? My DS did his today and had to fill in all the questions about parents' income even though he is a 5th year student and the partial loan they get isn't means tested. There was a question that asked whether your parents have separated or divorced in the past year. I'm not sure if your Ex has to withdraw his support though. I seem to remember (from 4 years ago) that if you said "yes", the next question was "Will both parents be supporting your application or just one?" or something along those lines.

The 21/22 loan is based on your previous year's income if you are self employed (tax year 20/21) and you have already submitted that for the current year assessment for the 20/21 loan. If your income has dropped further since April 21, I think you will have to do another current year assessment for 21/22. It might be better to leave it for a few months as they probably won't accept an income projection for 21/22 based on just 2 month's turnover. Although that might mean they won't get the full first loan payment they are entitled to in October, although they will get a catch up payment once it has been processed.

We just did a CYI for 21/22 as our income is 15% lower than the year they were taking it on - so it sounds like you will do

I'm sorry I don't know about the ExDP part

I've found SLC Facebook messenger helpful - I often send messages through that and get replies quite quickly (eg. within 24 hours) the CYI has to be sent on paper, can't be done electronically

Re: @chesirecat99 point about not accepting 2 months of projections

They accepted my self-employed CYI for 21/22 but then I usually earn about the same year on year, this may not apply to you (it's my dh's salary that has decreased for the CYI)

When you calculate your profits for accounting purposes you simply deduct all outgoings from incomings.

You then adjust that figure for tax purposes, so for example you might have spent money entertaining a client which is not allowable as an expense for tax purposes. Or you might have bought an asset and you can only offset depreciation not the total cost. So that amount needs to be added back onto your taxable profit.

That figure after you’ve done this is your adjusted taxable profit.

The student loan is based on the previous year's self assessment if you are self employed, @NotSorry. You did a CYI because your DH's income dropped but your income didn't change and you have proof of our previous year's income and (presumably) proof of what you had earnt in the current tax year so far that showed your income was continuing at the same level as previous years when you did the CYI.

OP is predicting that her income is going to fall by a further 15% this year but she doesn't actually know what she is going to earn as it hasn't happened. It depends why she thinks that will happen. If the reason is the OP (for example) was employed for 6 months of last year, then freelance but earnt a steady but smaller freelance income for months and her prediction is based on her freelance earnings for 6 months x 2, or if she has had to reduce her working hours so she is reducing her predicted income in proportion to the hours she will be working, it would probably be fine as she is basing her prediction on evidence. If OP's freelance work has recently dried up and she is basing her prediction on that, it will be more complicated.

@chesirecat99

You are correct, that is a very informative post

Apologies if I’ve confused you OP