Student Loan Deductions
If you work as an employee and pay tax and National Insurance through the Pay As You Earn (PAYE) Scheme, your employer will calculate and deduct student loan repayments due each pay period, based on your earnings for that period.
The Student Loans Company will advise HM Revenue & Customs (HMRC) when you are due to begin repayment.
ENTITLEMENTS
The income threshold for starting to make repayments is £15,000 a year (£1,250 a month or £288 a week). Once an employee's income goes over the threshold, you deduct 9% of their income that's over the threshold towards repaying their loan.
EMPLOYER’S ROLE
At the end of each financial year, your employer must tell HMRC how much they have repaid by advising them of your deductions. HMRC will then send these details on to the Student Loans Company.
HMRC and the Student Loans Company will only be informed of your total repayments at the end of each financial year.
No information regarding repayments, balances and collection will be passed between the Student Loans Company and HMRC other than during these repayment information transfers.
RECORDS TO KEEP
If you want the Student Loans Company to calculate your balance between statements, you must keep:
- your wage slips
- your P60 form (given to you at the end of each tax year by your employer)
- your P45 and / or P46 if applicable
APPLYING STUDENT LOAN DEDUCTIONS IN BRIGHT PAY
To access this utility, simply go to ‘Employees’ and select the employee’s name on the left:
1) Click on the Tax/ NICS heading
2) Tick the Student Loan box to indicate that the employee is liable to make student loan repayments
3) Click Save Changes
The payroll software will now automatically calculate and apply the appropriate student loan deduction as per the current Student Loan Deduction Tables. The amount will be deducted from the employee’s Net Pay.
QUICK EDIT FOR STUDENT LOAN DEDUCTIONS
A quick-edit facility for student loan deductions can also be found in ‘Payroll’:
1) Select the employee’s name on the left
2) Click Edit icon to ‘Edit Employee PAYE Details’
3) Tick or untick the Student Loan box as applicable
4) Click Save
