Re-instatement of the underestimation penalty

Sections 4, 5 and 161A

The underestimation penalty that applied under the Student Loan Scheme Act 1992 has been re-instated. As the existing late payment interest rules are retained, late payment interest will only be charged if full payment of a borrower's interim payments is not made by the final interim payment due date for the tax year. Re-instating the underestimation penalty provides an incentive for borrowers who use the estimation method for calculating their interim payments for a tax year to ensure their estimate is not significantly lower than their actual end-of year repayment obligation.

Application date

The amendments apply from 1 April 2013.