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Employers have been required to deduct Student Loan repayments through the payroll from 6 April 2000. Does your payroll system cope?
A new Student Loans scheme applies to all new loans made after August 1998. Loans taken out before then had fixed repayments. The Inland Revenue have the responsibility to identify people eligible to repay a Student Loan.
Once identified, the Inland Revenue issue a 'Start Notice' (form SL1) to the employer. When it is time to cease deductions, the Inland Revenue issue a 'Stop Notice' (form SL2).
Based on tables available from the Revenue from April 2005, the employer has to deduct 9% of the ex-students marginal income over £15,000 per annum.
The employee's payslip should show the deduction as a separate item.
The amount deducted will be remitted to the Inland Revenue with other PAYE and NIC deductions, and included on forms P11, P35 and P14/P60.
The Inland Revenue only pass details of the amount collected to the Student Loan Company after 5 April each year, so employers will continue to deduct repayments after the loan is paid off, unless the student notifies the Student Loan Company and it then requests the Inland Revenue to issue a stop notice. Excess repayments take time to recover.
See also Employment Status, Contract of Employment, Working Time Regulations, PAYE, NIC, SSP, SMP, SPP, SAP, NMW.
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