20 Jul Student Loan Notices
As an employer you are required to collect repayments of student loans your employees took out through the Student Loan Company (SLC) while they were studying, during years after September 1998.
You are told to start making SLC deductions by a SL1 notice from HMRC. You should work out the correct figure of employee earnings on which Student Loan deductions are due. The figure to use is the same gross pay amount that you would use to calculate your employer’s secondary Class 1 National Insurance contributions (NICs).
Start making Student Loan deductions from the next available payday using the correct plan type, which you will select from a dropdown box on your HM Revenue and Customs (HMRC) submission, if any of the following apply:
- your new employee’s P45 shows deductions should continue – ask your employee to confirm their plan type
- your new employee tells you they’re repaying a Student Loan – ask your employee to confirm their plan type
- your new employee fills in a starter checklist showing they have a Student Loan – the checklist should tell you which plan type to use
- HMRC sends you form SL1 ‘Start Notice’ – this will tell you which plan type to use
- you receive a Generic Notification Service student loan reminder – ask your employee to confirm their plan type
Plan types and thresholds
With effect from April 2018, the thresholds for making Student Loan deductions are:
- Plan 1 – £18,330 annually (£1527.50 a month or £352.50 a week)
- Plan 2 – £25,000 annually (£2083.33 a month or £480.76 a week)
Stopping Student Loan deductions
Stop making Student Loans deductions when you receive a SL2 ‘Stop Notice’ from HMRC and from the first available payday after the deduction stop date shown on the notice. The ‘first available payday’ is the first payday on which it’s practical to apply that notice.
If you have a SLC loan yourself and are self-employed, the SLC loan repayments should be collected through your annual self-assessed tax bill.
If your self-employed profits are less than £18,330 per year, you are not required to make any SLC repayments. This also applies if your salary is under £18,330 or you have a number of jobs from which you earn under that threshold in each.