Nov 2013


Knowing your responsibilities as a UK employer re student loan deductions

With the increased amount of students entering the workplace owing close to £30000 (for tuition fees averaging £9000 a year along with living costs) it could be many years until a student debt is repaid. Once an employee has commenced employment student loan deductions will be taken at source from their pay and sent by their employer to HMRC so the sooner this begins the sooner the student loan is paid off.

When should an employer begin taking student loan deductions ?

1. When a receipt is received from HMRC of a start notice SL1 informing the employer from when they should start taking the student loan deduction.
2. The employee has a P45 from a previous employer and there is a yes ticked beside liable for student loan or any other mark at item 5 on the P45.
3. If the employee does not have a previous P45 they must complete a starter checklist (similar to a P46 form) one of the questions asks if the student has a student loan that has not been fully repaid and is not being repaid directly to the students loan company. If the employee answers yes student loan deductions are now due.

Where an employee does not provide a P45 to their new employer and a starter checklist is filled out the employee may not admit to having to pay a student loan so the preferred option to set up a new employee would be to receive the P45 from the previous employer or a start notice SL1 which they would receive from HMRC.

Posted byDenise CowleyinPayroll Software