With effect from April 2024, the thresholds for making student loan deductions are:
Employees repay 9% of the amount they earn over the threshold for Plan 1, 2 and 4.
Postgraduate loans — £21,000 annually (£1,750 a month or £403.84 a week).
Employees repay 6% of the amount they earn over the threshold for postgraduate loan.
Starting student loan and postgraduate loan deductions — checking plan and loan type
You should work out the correct figure of employee earnings on which student loan and postgraduate loan deductions are due. Use the same gross pay amount that you would use to work out your employer’s secondary Class 1 National Insurance contributions.
Your employee may be liable to repay a postgraduate loan at the same time as a student loan (Plan 1 or Plan 2 or Plan 4). Start making student loan or postgraduate loan deductions, or both, from the next available payday using the correct plan or loan type or both.
You will need to include these on your Full Payment Submission (FPS) if any of the following apply:
If your employee does not know which plan or loan they’re on, ask them to check which repayment plan they are on. If they cannot tell you, use Plan 1 in your payroll software until you get a student loan start notice (SL1). Defaulting to Plan 1 is only available for Plan 1, Plan 2 or Plan 4 loans.
Employee has more than one plan type
When the employee is on more than one plan, start deductions for the plan with the lowest recovery threshold until you get a SL1. Check the student loan recovery thresholds.
Off-payroll working
If you’re operating off-payroll you are not responsible for deducting student or postgraduate loan repayments for workers engaged through their own companies. The worker will account for student loan obligations in their own tax return.
Find out more about deemed employer responsibilities under off-payroll working rules.
SL1 or PGL1 start notice received
If you receive a SL1 or PGL1 start notice for someone:
Your employee should ask for a refund if they think they have overpaid their loan.
If you receive an employee’s P45 after they have started to work for you, ask them to confirm their plan or loan type if:
You should start making deductions from the next payday.
If your employee does not know their plan or loan type they should check which repayment plan they are on to find out.
Do not make any deductions in arrears.
Employees seconded to work in the UK by an overseas employer should fill in a starter checklist. If they say that they have a student loan or postgraduate loan, or both, you should to start making these deductions from the next payday.
Find more information in the PAYE and National Insurance contributions guidance.
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