Student Loans are taken out by university students during their time in education.
These loans must be paid back when the person earns over a certain amount of money. This threshold is defined below along with other useful information on when an employee should start repaying.
Please note, postgraduate plans will only be available in 1920 version of the software. Click here to view the post graduate section of this article.
Changes in 2019/20 Tax Year for Plan 2
From the 6th April 2019 there will be changes to the earnings threshold of plan 2, however, the deductions will remain at 9%. The threshold will raise from £25,000 to £25,725. Due to the way student loan repayments are calculated this may affect the amounts deducted despite having no change in pay. Below you can find some examples of some student loan repayments:
£25,725 and under
Repay Amount Monthly
Changes in 2019/20 Tax Year for Plan 1
Similar to plan 2 the earnings threshold for plan 1 has been raised, but the deductions will remain at 9% also. The threshold will raise from £18,330 to £18,935. As before its worth noting that the monthly repayment amount may change despite no change in pay, this is just down to the way student loan deductions are calculated.
£18,935 or under
Repay Amount Monthly
Whilst earning over the threshold the student will be required to pay student loan deductions until their loan has been repaid.
Post graduate Plans in 2019/20
There has also been an new student loan plan type introduced called 'Post graduate loan deduction'. This is for individuals under 30 years of age; who have taken out a loan in order to take a post graduate course in any subject. The threshold for this type of plan in the 19/20 tax year is £21,000 and will be deducted at 6% in the pound.
You can enter a post graduate loan into the software by going to 'Employee Maintenance' > 'Pay Rates'. On this screen you should see a section called 'Post Graduate Loan'. Ticking the box in this section will apply the loan to the employee and cause them to take deductions provided they cross the necessary earnings thresholds.
You may also notice there are two other fields for recording the 'Start Date' and 'Stop Date' these fields are fairly straight forward and are used for recording the start and stop date of the loan repayment respectively.