Key features
Under new section 20A Inland Revenue can instruct a borrower’s employer to make increased repayment deductions of up to 15 cents in the dollar for borrowers who have failed to have the correct deductions made in any tax year or have any other amount payable which has become overdue. The higher rate will apply until any shortfall, including any late payment penalties, has been fully repaid. The higher rate may be reduced if payment would cause serious financial hardship. Consequential change is being made to section 19 of the Student Loan Scheme Act 1992.
Background
Borrowers whose primary income exceeds the repayment threshold are required to advise their employer that repayment deductions should be made. Many borrowers fail to fulfil this obligation, which may result in large end-of-year liabilities. Other borrowers may fail to pay a liability, such as their end-of-year payment, when it falls due. The bill allows Inland Revenue to recoup any shortfall by increased future deductions from any salary and wages earned by the borrower.