Thousands of students have just started at university. Many of them will have a student loan and may use it to pay for tuition fees, rent, baked beans and the occasional pint. But eventually the loan has to be paid back.

This is where HMRC comes in. Student loan accounts are administered by the Student Loans Company (SLC), but HMRC collects repayments on loans to students who started higher education from August 1998 onwards.

Borrowers start paying back their loans from 6 April after they leave university or college, although they only have to make repayments when they are earning more than £1,250 per month.

The amount repaid depends on gross income, but borrowers can make additional repayments to SLC, if they wish.

So how does HMRC collect repayments? For employees, the employer deducts repayments from gross earnings through PAYE, along with income tax and National Insurance contributions. Employees who also have to complete an annual Self Assessment (SA) return may need to make extra repayments if they have other sources of income.

Self-employed borrowers complete an annual Self Assessment return. The automated SA calculation works out their repayment which is included in their SA liability for the year.