Student loan and postgraduate loan repayment guidance for employers

Plan and loan types and thresholds

With effect from April 2022,2023, the thresholds for making student loan deductions are:

• Plan 1 — £20,195£22,015 annually (£1,682.91(£1,834.58 a month or £388.36£423.36 a week)
• Plan 2 — £27,295 annually (£2,274.58 a month or £524.90 a week)
• Plan 4 — £25,375£27,660 annually (£2,114.58(£2,305.00 a month or £487.98£531.92 a week)

Employees repay 9% of the amount they earn over the threshold for Plan 1, 2 and 4.

Postgraduate loans (PGL) — £21,000 annually (£1,750 a month or £403.84 a week)week).

Employees repay 6% of the amount they earn over the threshold for PGL.postgraduate loan.

Starting student loan and PGLpostgraduate deductions,loan deductions — checking plan and loan type

You should work out the correct figure of employee earnings on which student loan and PGLpostgraduate loan deductions are due. Use the same gross pay amount that you would use to work out your employer’s secondary Class 1 National Insurance contributions.

Your employee may be liable to repay a PGLpostgraduate loan at the same time as a Planstudent 1,loan (Plan 1 or Plan 2 or Plan 4.4). Start making student loan and, or PGLpostgraduate deductionsloan deductions, or both, from the next available payday using the correct plan or loan type or both.

You will need to include these on your Full Payment Submission if any of the following apply:

• your new employee’s P45 shows deductions should continue — ask your employee to confirm their plan or loan type, or both
• your new employee tells you they’re repaying a student loan — ask your employee to confirm their plan or loan type, or both
• your new employee fills in a starter checklist showing they have a student loan and or PGLpostgraduate loan — the checklist should tell you which plan or loan type, or both to use
• HMRC sends you forma SL1 ‘Startstart Notice’notice — this will tell you which plan type to use
• HMRC sends you forma PGL1 ‘Startstart Notice’notice — this will tell you they have a PGL postgraduate loan
• you receive a Genericgeneric Notificationnotification Serviceservice (GNS) student loan and,or postgraduate loan, or PGLboth, reminder — ask your employee to confirm their plan or loan type, or both

If you’re operating off-payroll you are not responsible for deducting student or postgraduate loan repayments for workers engaged through their own companies. The worker will account for student loan obligations in their own tax return.

Follow the guidance Off-payroll working.

If your employee does not know which plan or loan type they’re on, ask them to go to the Repayingrepaying your student loan guidance. If they cannot tell you, use Plan 1 in your payroll software until you get a student loan start notice (SL1).(SL1). WhereDefaulting to Plan 1 is only available for Plan 1, Plan 2 or Plan 4 loans.

Employee has more than one plan type

When the employee is on more than one plan, start deductions for the plan with the lowest recovery threshold until you get ana SL1. SL1. Check the student loan recovery thresholds.

Off-payroll working

If you’re operating off-payroll you are not responsible for deducting student or postgraduate loan repayments for workers engaged through their own companies. The worker will account for student loan obligations in their own tax return.

Find out more about deemed employer responsibilities under off-payroll working rules.

SL1 or PGL1 start notice received

If you receive a form SL1 or PGL1 ‘Startstart Notice’notice for someone:

• you have never employed, phone contact the Employer Helplinehelpline, HMRC will investigate and contact you again if necessary, file away the SL1 or PGL1 ‘Startstart Notice’notice
• who claims never to have had a student loan, start making deductions in line with the Startstart Noticenotice and continue doing so unless HMRC tells you otherwise, then file away the SL1 or PGL1 ‘Startstart Notice’notice
• for whom you’re already making deductions you should:
  • check the plan type on the SL1 ‘Startstart Notice’notice you have just received
  • update your payroll software and start making deductions using the new plan type at the next available pay day if this is different to the one you are currently using
  • check the details on the PGL1 and update your payroll software if needed

If your employee thinks they have overpaid their deductions they should contact Student LoanLoans Company (SLC) — repayment enquiries.

If you receive an employee’s P45 after they have started to work for you, andask them to confirm their plan or loan type if:

• they did not tell you, or indicate on their starter information they were a student loan borrower, or borrower
• there is a gap since their last employment, you should ask them to confirm their plan or loan type.
  employment

You should start making deductions from the next payday.

If your employee does not know their plan or loan type they should go to the Repayingrepaying your student loan guidance. to find out.

Do not make any deductions in arrears.

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Find more information in the guide to PAYE and National Insurance contributions guidance.

Generic Notificationnotification Serviceservice (GNS) messages

HMRC will send 4 types of student loan or postgraduate loan GNS reminders.

One is a reminder to start deductions where:when:

• you submit a Full Payment Submission (FPS) for an employee who has a student loan or PGLpostgraduate loan deduction due
• the FPS shows a figure of nil

This GNS reminder is confirmation that HMRC has sent or is in the process of sending you ana SL1 or PGL1 ‘Startstart Notice’notice for the employees shown.

The second is a reminder to make deductions using the correct plan type where:when:

• you submit an FPS for an employee and have selected the plan type from the drop-down box on your payroll software
• the plan type declared on the FPS does not match what HMRC holds for that employee

For each employee shown on the reminder, you should start making the correct deductions from the first available pay day.

You should look at the SL1 or PGL1 ‘Startstart Notice’notice or completed starter checklist for details of the correct student loan plan and loan type to use. If you do not have either of these, ask your employee the starter checklist questions. This will allow you to start deductions using the correct plan and loan type.

If you’re paying an occupational pension rather than a salary, you should ignore any student loan GNS message.

The third GNS message, introduced from September 2019, is a reminder to stop student loan or PGLpostgraduate loan deductions for an employee from the next available pay date.

This GNS reminder is confirmation that HMRC has sent or is in the process of sending you an SL2 or PGL2 ‘Stopstop Notice’notice for the employees shown. This GNS message and the SL2 or PGL2 ‘Stopstop Notice’notice will tell you the correct loan or plan type to stop taking deductions from. If you do not have either of these you can ask your employee.

The fourth GNS message, introduced from April 2020, is a reminder not to deduct Studentstudent Loanloan or PGLpostgraduate loan deductions for an employee who either:

• is subject to the off-payroll working rules or
• only has an occupational pension rather than a salary.
  salary

These employees are not liable for Studentstudent Loanloan and PGLpostgraduate loan deductions and you must stop taking these deductions from the next available pay date.

For occupational pensions, refund any Studentstudent Loanloan and or PGLpostgraduate loan deductions you have made within the current tax year to your employee.

For employments subject to the off-payroll working rules from April 2020, you should only refund the Student Loan and or PGL deductions taken from payments subject to the off-payroll working rules only.rules.

You will receive these reminders as GNS messages to your Online PAYE Online account. HMRC recommends that you register for email alerts for these reminders and may contact you to make sure the correct deductions begin.

Stopping student loan and PGLpostgraduate loan deductions

Stop making student loan or PGLpostgraduate loan deductions when:

• you receive an SL2 or PGL2 ‘Stopstop Notice’notice from HMRC
• in exceptional circumstances, HMRC may ask you to stop making deductions — if this is the case they’ll tell you in writingwriting, or by phone and then confirm in writing

SL2 or PGL2 ‘Stopstop Notice’notice received

Stop making deductions 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 the borrower is still employed by you and you use Basic PAYE Tools for this employee edit the employee details in the employer database. You can do this by removing the student loan or PGLpostgraduate loan borrower indicator and keepkeeping the SL2,SL2, or PGL2 ‘Stopstop Notice.’notice. You can download Basic PAYE Tools.

If the borrower is no longer employed by you and you have not submitted leaver details to HMRC:

• leave the box headed ‘Enter ‘Y’ if student loan deduction is to be made’ blank
• submit leaver information in Real Time Information (RTI) and provide employee with P45 parts 1A, 2 and 3

If you have submitted leaver details you should keep the SL2 or PGL2 ‘Stopstop Notice’.notice.

You cannot stop making deductions because your employee asks you to. Your employee should contact the SLCStudent Loans Company if they think they have overpaid their loan.

Employee dies

Do not make any deductions from any payments made after an employee dies as these payments are not subject to Class 1 National Insurance contributions. This applies even though the payment may relate to a period prior to death, for example, unpaid wages.

Employee leaves

If you make a payment to a borrower who is no longer your employee, calculatework out the student loan or PGL deductions on the same amount, and for the same earnings periodperiod, as for employer’s secondary Class 1 National Insurance contributions.

When an employee leaves, check if you’re making student loan or PGLpostgraduate loan deductions.

When student loan or postgraduate loan deductions should continue

If you have received:receive:

• a SL1 or PGL1 ‘Startstart Notice’notice with a start date in the current or a previous tax year
• a P45 with a ‘Y’ in box 5
• starter information indicating student loan or PGLpostgraduate loan deductions apply

You should:

• fill in P45 with ‘Y’ in box 5 indicating student loan deductions should continue
• send leaver information to HMRC in RTIReal Time Information and give your employee P45 parts 1A, 2 and 3
• enter ‘Y’ on P45 box 5 even if your employee has not earned enough to make student loan or PGLpostgraduate loan repayments

When student loan or postgraduate loan deductions should not continue

If you receive either:

• forma SL2 or PGL2 ‘Stopstop Notice’notice
• written instructions from HMRC to stop making deductions
• forma SL1 or PGL1 ‘Startstart Notice’notice with a start date which is after they leave your employment

You should:

• fill in P45 leaving box 5 blank
• send leaver information to HMRC in RTIReal Time Information and give your employee P45 parts 1A, 2 and 3

Employee has more than one job

If an employee has more than one job you should ignore earnings from the other employer.

If the employee has more than one job with you follow the aggregate rules if they apply. Otherwise treat both employments separately.

Change of pay interval

If the interval between the payments of an employee’s earnings changes, for example, from weekly to monthly, you need to adjust the deductions for the new earnings period.

Work out the student loan or PGLpostgraduate loan deduction from the first payment after the change based on the new earnings period. This may mean you include details of pay and deductions already included in the last pay period before the change.

If you have included a payment already made in the first of the new longer periods, you should take the paymentfollowing already made, and the deduction worked out on it, into account when working out the student loan or PGL deduction for the new period as a whole.whole:

• any payment that is already made
• the deduction worked out on it

You can find more information on what to do if the interval between the payment of an employee’s earnings changes in Chapter 1 of the guide to PAYE and National Insurance contributions.

The guidance given for National Insurance contributions purposes also applies to student loan deductions.

Errors deducting student loan or PGLpostgraduate loan repayments

Follow this process unless you have received an SL2 or PGL2 ‘Stopstop Notice’.notice. If you’ve received a SL2 or PGL2 ‘Stopstop Notice’notice you must not make any refund. Instead, your employee should contact the SLC.Student Loans Company.

Current tax year

If you have made an over deduction and you can repay it to the borrower during the current tax year you should do so, amending your Year-To-Dateyear-to-date payroll records.

If you cannot repay itit, phonecontact the Employer Helpline.

If there’s been an under-deduction and you can collect it from the borrower in the current tax year you should do so. Correct your Year-To-Dateyear-to-date payroll records to reflect what was actually deducted.

If you cannot collect itit, phonecontact the Employer Helpline.

Example	Amount
Under-deduction in week 8	£25
Deduction from tables in week 9	£15
Under-deduction recovered in week 9	£15
Maximum total deduction	£30*

(*that is, £15 week 9 deduction + £15 under-deduction)

You may recover the remaining £10 under-deduction in later pay periods following the above rules.

Previous tax year

If you have submitted your final FPS for that year you do not need to take any further action. If asked, you should tell your employee to contact the SLCStudent Loans Company.

If you have not submitted your final FPS for that year for any over-deductions you can repay the employee and amend your records so the final FPS reflects the correct amounts. For under-deductions you do not need to take any further action. Further deductions will cover repayment of the balance of the loan.

Variable interest rates

From April 2017, SLCthe Student Loans Company set interest rates for Plan 2 loans based on an individual’s income. The FPS you make gives this income information, and HMRC passes it to SLC.the Student Loans Company. There is no action for you to take but some employees may ask you to check and confirm the information you have sent to HMRC.

Sharing PAYE information with SLC:the Student Loans Company: more frequent data sharing

From April 2019, HMRC started to send the student loan and PGLpostgraduate loan repayment information reported on your FPS to the SLCStudent Loans Company more frequently throughout the tax year. Known as ‘more frequent data sharing’, this means that there will be regular updates on your employee’s student loan and,or postgraduate loan, or PGLboth, balance. There is no action for you to take but some employees may ask you to check and confirm the information you have sent to HMRC.

Employees working abroad

Employee paid from the UK

If you’re operating PAYE as though the employee were in the UK continue to make student loan or PGLpostgraduate loan deductions no matter how long they’re working abroad.

Employee paid locally abroad

If you pay a borrower abroad they must contact the SLCStudent Loans Company to have a repayment schedule set up.

Court orders and how they affect student loan and PGLpostgraduate loan deductions

In addition to student loan and PGLpostgraduate loan deductions, you may have to consider a court order such as an Attachment of Earnings Order (AEO) or Deductions from Earnings Order (DEO).(DEO).

The order and amount of student loan and PGLpostgraduate loan deductions depends on whether the:

• AEO,Attachment DEOof Earnings Order or Deduction of Earnings Order is a priority or non-priority order
• AEO,Attachment DEOof Earnings Order or Deduction of Earnings Order is based on specific or percentage amounts
• total deductions including student and,loan or PGLpostgraduate loan, or both, deductions means your employees pay is less than the protected earnings level specified in the court order

Order of deduction in England, Wales and Northern Ireland

Priority order — percentage based

Some priority orders — Council tax or Community Charge AEOsAttachment of Earnings Orders or Income Support Deduction notices — are percentage deductions.

Do not deduct any student loan or PGLpostgraduate loan repayments until all such orders are paid in full.

AEOsAttachment of Earnings Orders issued by Magistrates’ Courts under The Courts Act 2003 Regulations are percentage based. You should still treat these as ‘Priority order — specific amounts’ and calculatework out the student loan and PGLpostgraduate loan deduction as normal.

Priority order — specified and non-specified amounts

If there is no specified level of protected earnings:

1. Apply the priority order against the borrower’s attachable earnings before making student loan or PGLpostgraduate loan deductions.
2. CalculateWork out the student loan and PGLpostgraduate loan deductions using payroll software or the SL3 student loan deduction tables.

If there is a specified level of protected earnings:

1. Apply the priority order against the borrower’s attachable earnings before making student loan or PGLpostgraduate loan deductions.
2. CalculateWork out the PGLpostgraduate loan and student loan deductions with PGLpostgraduate loan deductions taking priority before Studentstudent Loanloan deductions.
3. Check the deduction of court orders, PGLpostgraduate loan or student loan deduction does not reduce the available income below the level of protected earnings.

WhereWhen the deduction of court orders, PGLpostgraduate loan and student loan reduces the available income below the level of protected earnings, the maximum amount of student loan and PGL deductions is the difference between the following:the:

• the net attachable earnings after deduction of the AEO,Attachment DEO of Earnings Order or Deduction of Earnings Order
• the level of protected earnings rounded down to the nearest pound, if negative, set to zero

Non-priority orders

Take away student loan or PGLpostgraduate loan deductions before non-priority court orders.

Order of deduction in Scotland

Scottish court order

Do not make any deductions for student and,loan, or PGLpostgraduate loanloans deductions if you’re required to apply any of the following:

• an Earnings Arrestment
• a current Maintenance Arrestment
• a Conjoined Arrestment Order

Deduction of Earnings Order

Make student and,loan, or PGLpostgraduate loan deductions after the DEO,Deduction of Earnings Order, which is a priority order,order. butThe the employee’s pay must not fall below the protected earnings level.

Scottish court orders and DEOs Deduction of Earnings Orders

Do not make any student and,loan, or PGLpostgraduate loan deductions if you have a DEODeduction of Earnings Order and a Scottish court order to apply.

Scottish Debt Arrangement Scheme (DAS)

Collection of student and,loan or PGLpostgraduate loan deductions (or both) is not affected by instructions to make deductions under the DAS.Debt Arrangement Scheme.

Repayment of teachers’ loan scheme

This scheme is no longer available.

Record keeping

You should keep records of allthe wages,following andfor otherat documentsleast 3 years after the end of the tax year to which they relate:

• all wages relating to the calculation and deduction of student loan or PGLpostgraduate repayments,loan includingrepayments
• other formsdocuments SL1relating andto PGL1the ‘Startcalculation Notice’ and SL2deduction and PGL2 ‘Stop Notice’, for a period of atstudent leastloan 3or yearspostgraduate afterloan therepayments
• SL1 endand ofPGL1 thestart taxnotices yearand toSL2 whichand theyPGL2 relate.
  stop notices

Enter the amount of student loan and PGLpostgraduate loan deductions in the appropriate box on your employee’s FPS, and P60 (whole pounds only).