The following Employment Tax guidance note by Tolley in association with Vince Ashall provides comprehensive and up to date tax information covering:
HMRC is responsible for the collection of student loan deductions (SLDs) from April 2000 under the Education (Student Loans) (Repayment) Regulations 2009, SI 2009/470.
HMRC collects the amounts 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 NI payments. It is HMRC who notifies an employer when to start or stop an SLD. 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 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. In addition to student loans, there are also postgraduate loans (PGL). These operate in the same way as SLDs for the purposes of PAYE.
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 SLDs from the following 6 April.
This notification to start the SLDs is via form SL1 (Student Loan Start Notice).
Deductions start from the first available pay date after the start date given on the SL1.
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 SLDs, an employer may start the SLDs based on notifications other than the SL1.
When a new employee is engaged, a form P45 will be provided to the employee by the previous employer or, if the P45 is
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.