Employers Responsibilities for Student Loans Repayments Via The Tax System

20th October 2022

Student loans
Employers are responsible for

actioning student loan and postgraduate loan start and stop notices
deducting student loan and postgraduate loan using the correct:
plan and loan type supplied by their employee.
thresholds and rates for the relevant loan and plan type.
providing HMRC with details of the deductions in real time.
paying the student loan and postgraduate loan deductions to HMRC along with tax and National Insurance contributions.
giving employees details of the deductions on their wage or payslip and P60 certificate

Your role in collecting student loan and postgraduate loan through the tax system is important.

According to Real Time Information (RTI) data for 2021 to 2022 over 95% of employers accurately deducted student loan and postgraduate loan for their employees and sent this information to HMRC on their Full Payment Submission within the RTI submissions.

Although most employers get it right first time, there is still a small percentage who do not.

Errors on RTI
Common errors identified on RTI were:

no student loan and postgraduate loan deductions taken, despite HMRC sending a start notice
student loan and postgraduate loan deductions taken and recorded under the wrong loan or plan type
deductions continuing after a stop notice has been issued
Tips for getting student loans right
When you receive a ‘start notice' or ‘stop notice', you should:

Action start and stop notices on the next available payday from receipt.
Always check the start notice, even if you are already taking deductions (this will give you reassurance that you are taking deductions under the correct loan and plan type).
Apply the relevant loan and plan type to your payroll (this can be found on the start notice, by asking the employee or by checking the starter checklist for new employee — if the employee does not know their loan or plan type, they can log into their Student Loans Company account).
Apply the correct thresholds and rates for the relevant loan or plan type.
Take extra care to make sure entries are recorded accurately on the employees RTI Full Payment Submission.
Where you do not action the start or stop notice, or take deductions under the wrong plan type, HMRC will send a Generic Notification Service message to your Online PAYE account as a reminder. We recommend you register for email alerts for Generic Notification Service messages.

This makes sure:

employees do not under or overpay their student loan or postgraduate loan

HMRC sends the accurate deductions to the Student Loan Company, which reduces the risk of unnecessary Student Loans Company interest charges being charged to your employee
the student loan balance remaining is up to date

the student loans repayment guidance for employers
See https://www.gov.uk/guidance/special-rules-for-student-loans