Student and postgraduate loan deductions

Produced by Tolley in association with Vince Ashall

The following Employment Tax guidance note Produced by Tolley in association with Vince Ashall provides comprehensive and up to date tax information covering:

  • Student and postgraduate loan deductions
  • SLD and PGLD notifications
  • Starting SLD / PGLD
  • Student loan deductions
  • Ceasing SLD / PGLD
  • Deductions
  • Impact of salary sacrifice
  • Impact of non-cash benefits
  • Incorrect student loan deductions made
  • Error made in current tax year
  • More...

Student and postgraduate loan deductions

HMRC is responsible for the collection of student loan deductions (SLD) from April 2000 under SI 2009/470. Postgraduate loan deductions (PGLD) are also collected by HMRC under SI 2016/606.

HMRC collects the amounts of SLD / PGLD deducted by employers from their employees’ pay on behalf of the Student Loans Company (SLC). Employers pay the amounts deducted over to HMRC together with their normal tax and NIC payments. It is HMRC who notifies an employer when to start or stop an SLD / PGLD. Consequently, an employer has no or minimal contact with the SLC.

An employer can thus only deal with enquiries from borrowers that concern the actual SLD / PGLD calculation / deduction. The employer, and indeed HMRC, is not privy to the amount of the student loan nor to any balance of the loan outstanding.

SLD and PGLD notifications

Starting SLD / PGLD

A student loan borrower becomes liable to start repaying their student loan from 6 April following completion of their course, or leaving their course. An employer engaging someone who has recently left higher education in August / September would be notified by HMRC to commence SLD / PGLD from the following 6 April.

This notification to start the SLD is via form SL1. Notification of the start of a PGLD is via form PGL1.

Deductions start from the first available pay date after the start date given on the form SL1 / PGL1.

Repayment of student loans is expected to continue over a number of years and borrowers will probably change employers several times during this period. To ensure the continuity of SLD / PGLD, an employer may start the SLD / PGLD based on notifications other than the form SL1 / PGL1.

When a new employee is engaged, a form P45 will be provided to the employee by the previous employer or, if the P45 is not available for the first payday, new starter information will be provided by the employee. Where

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