Student Loan Deductions

Student Loans are part of the Government's financial support package for students in higher education in the UK. They are available to help students meet their expenses while they are studying.

HMRC is responsible for collecting repayments of Income Contingent Student Loans in cases where the borrower is within the UK tax system and no longer in higher education. The Student Loans Company will advise HM Revenue & Customs (HMRC) when an employee is due to begin repayment of their student loan(s).

Employer's Role

The employer is responsible for:

• making deductions of student loan repayments from an employee's earnings
• keeping records of the deductions made
• paying the deductions over to HMRC
• providing HMRC with details of the deductions within each FPS submission
• giving an employee details of their deductions on their payslips and P60 certificate
• on form P45, when the employee leaves the employment, recording student loan repayments made in your employment

Entitlements

The income threshold for an employee to start making repayments is £16,910 a year (£1,409.16 a month or £325.19 a week). Once an employee's income goes over the threshold, the employer will deduct 9% of their income that's over the threshold towards repaying their loan.

Applying Student Loan Deductions in BrightPay

To access this utility, simply go to ‘Employees’ and select the employee’s name on the left:

1) Click on the Tax/ NICs/RTI 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. 

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 from the listing

2) Click the Edit icon at the top right of the employee's payslip

3) Within Tax/ NICs/RTI Details, tick or untick the Student Loan box as applicable

4) Click Save