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.


Changes in 2016/17 Tax Year (Plan 2)

From the 6th April 2016 there will be a new “Plan” introduced for students who started education in 2012. This new scheme changes the rates at which an employee will pay back their student loan. The new rates are as follows:


Earnings

£21,000 and under

£25,000

£30,000

£50,000

Repay Amount Monthly

£0

£30

£67

£217


Every time you have a new employee on your payroll who has a student loan to repay you should receive an SL1 form from HMRC. This form will show you what “Plan Type” you will need to use, Plan 1 (which is what would have been used previous to these changes) or Plan 2 ( which is being introduced).

On a new starters P45 form it will not indicate that they have been using a particular plan type (1 or 2). You will either have to ask the employee, contact the student loan company or failing those use plan 1 as a default until you can be sure that it is the correct one. HMRC will have checks on their system to make sure that the information you have submitted is correct. If you send the wrong information you will be contacted by HMRC or the student loan company.

If you have an employee who has already been paying their student loan before the change, they will continue to pay the original amount to the loan company.


Pre 2016/17 (Plan 1)

Students who started education before 2012 will be paying their pension provider through “Plan 1”. The rates for plan 1 have not changed and any employee will continue to pay at the same rate. These rates are displayed below:

Earnings

£17,335 or under

£20,000

£25,000

£30,000

£50,000

Repay Amount Monthly

£0

£23

£61

£98

£248

Whilst earning over the threshold the student will be required to pay student loan deductions until their loan has been repaid.


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