At the start of the new tax year in April 2021, the thresholds for student loans increased, which will affect employees that are repaying their academic fees.
The thresholds are:
- Student loan Plan 1 increased from £19,390 to £19,895 from this date,
- Employees on Plan 2 saw their student loan threshold rise from £26,575 to £27,295.
Employees repay nine per cent of the amount they earn monthly over the threshold for Plan 1 and 2.
In Scotland the threshold for loans, called Plan 4 loans, now starts at £25,000, with the same rate of repayment applied as Plan 1 and 2, while the threshold for postgraduate loan repayments (PGL) will begin at £21,000, with earnings above this threshold calculated at six per cent.
Employers must take action with their Payrolls
Employers must take action to start student and or postgraduate loan deductions where the new thresholds are met and record the deductions correctly on each employee’s payslip as part of their payroll operation.
If the earnings thresholds are not met, the employer should update the employee’s payroll record to show they have a student loan and/or post graduate loan and file the start or stop notice with HM Revenue & Customs (HMRC). Deductions should continue until HMRC tells an employer to stop them
Student loan payments are all part of the payroll service we offer. Once you retain us, we take care of everything payroll for you. Contact us for more details.