This means that some student loan holders have been overcharged student loan repayments on their tax returns.

The issue affects taxpayers in self assessment who are repaying a student loan and receive payrolled benefits in kind (BIKs) that are not subject to Class 1 National Insurance contributions (NICs) from their employer.

The issue was first identified by HMRC last September, but it has not managed to resolve the issue a year later.

At the time, HMRC wrote to taxpayers who had been affected by the issue, explaining their options and informing them that HMRC was ‘working to improve its systems’.  

HMRC acknowledged that this issue has arisen because the self assessment system is not able to tell the difference between income not liable to Class 1 NICs and the rest of the PAYE income.