Chapter 29 - Student Loans

Question 1

Introduction

Answer 1

HMRC is responsible for collecting loan repayments where the borrower is still in the UK tax system. For employees, it’s deducted from earnings.
Employer must make and record the deductions and pay them over to HMRC

Question 2

When to Make Deductions

Answer 2

HMRC will notfy the employer that the SL deductions should start using a Start Notice - form SL1. Deductions should be made from the first pay date after the start date shown on the notice and not before.
If a new employee’s P45 has a yes in the continue SL deduction box, deductions need to be made.
If a new employee doesn’t have a P45, they are asked if deductions need to be made.
For new employees, the employer must report the SL repayable on the FPS as part of their new starter info when they are paid for the first time

Question 3

Calculation of Dedcutions

Answer 3

Plan 1 applies to English and Welsh students starting study before 1/9/2012 and all Scots and NI students.
Plan 2 applies to Eng and Welsh starting after 1/9/2012

Question 4

Plan 1

Answer 4

Repayments are due where earnings exceed £18,330 per tax year. AKA £1,527 monthly or £352 weekly

Question 5

Plan 2

Answer 5

Repayments are due where earnings exceed £25,000 per tax year. AKA £2,083 monthly or £480 weekly

Question 6

Note

Answer 6

Earnings for this purpose are the same as those for Class 1 NIC purposes

Question 7

Rate of Deduction

Answer 7

Where the limit is exceeded, the deduction is 9% of earnings in excess of the limit.

Question 8

Payment

Answer 8

Paid over at the same time as the PAYE tax and NIC

Question 9

Ceasing Deductions

Answer 9

HMRC will issue an SL2 Stop Notice. The employer must stop making deductions from the first pay date after the notice.
If they don’t get a stop notice, then the employer must indicate to the new employer of Form P45 that SL deductions should continue