Managing Student and Postgraduate Loans

Student Loans

There are 4 Student Loan Plan Types each with a different threshold for repayments:

Plan 1 - £20,195 annually
Plan 2 - £27,295 annually
Plan 4 - £25,375 annually
An Employee repays 9% of the amount they earn over the threshold for Plan 1, 2 and 4.

Postgraduate Loan - £21,000 annually
An employee repays 6% of the amount they earn over the threshold for Post Graduate Loans.

If any of the following apply you will need to set up student loans so that they deduct from the payroll and are submitted to HMRC on the FPS:

• A new starters' P45 shows that deductions should continue, you will need them to confirm the plan type - enter this on the enrolment record when you create this

• A new starter completes a starter checklist showing they have a student loan and or PGL, this will confirm the plan type - enter this on the enrolment record when you create this

• You receive an SL1 ‘Start Notice’, this will confirm which plan type to use - you can apply this through the DPS

• You receive a PGL1 ‘Start Notice’ - you can apply this through the DPS

• you receive a Generic Notification Service student loan and, or PGL reminder — ask your employee to confirm their plan or loan type, or both - you can review these in the DPS

Setting up Student Loans

The Student Loan Plans are held on the Employee Record > Tax Info Tab

Open

These can be applied manually onto the employee record if required, otherwise they are set up when you create an employees enrolment record or apply an HMRC notification through the DPS.

Manual Changes
UK Enrolment Guide
HMRC DPS Guide

Once these have been set up on the employees record, the system will generate the student loan deductions based on the thresholds, when the payslips are processed.

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If you are using the Enhanced Payslip UK payslip template this will show on the payslip PDF under Statutory Deductions.

Refunding Student Loans

If you have incorrectly set an employee up as having a student loan and student loan has been deducted in a pay run and submitted on an FPS you will need to refund these contributions to the employee and submit this refund on the FPS.

You will likely receive a Student Loan Stop notification (if you have the DPS set up these will appear here) to let you know that this Student Loan Plan needs to be stopped.

Before you apply this notification you will need to ensure the Student Loan Contributions are refunded in the following pay run, for this to be submitted on the FPS the student loan plan type still needs to be selected on the Employee Record.

Useful Links

https://www.gov.uk/repaying-your-student-loan/what-you-pay

https://www.gov.uk/guidance/special-rules-for-student-loans