Student loan and postgraduate loan repayment guidance for employers
Guidance on making employees' student loan and postgraduate loan deductions in different circumstances.
Plan and loan types and thresholds
With effect from April 2024, the thresholds for making student loan deductions are:
- Plan 1 — £24,990 annually (£2,082.50 a month or £480.57 a week)
- Plan 2 — £27,295 annually (£2,274.58 a month or £524.90 a week)
- Plan 4 — £31,395 annually (£2,616.25 a month or £603.75 a week)
Employees repay 9% of the amount they earn over the threshold for Plan 1, 2 and 4.
Postgraduate loans — £21,000 annually (£1,750 a month or £403.84 a week).
Employees repay 6% of the amount they earn over the threshold for postgraduate loan.
Starting student loan and postgraduate loan deductions — checking plan and loan type
You should work out the correct figure of employee earnings on which student loan and postgraduate loan deductions are due. Use the same gross pay amount that you would use to work out your employer’s secondary Class 1 National Insurance contributions.
Your employee may be liable to repay a postgraduate loan at the same time as a student loan (Plan 1 or Plan 2 or Plan 4). Start making student loan or postgraduate loan deductions, or both, from the next available payday using the correct plan or loan type or both.
You will need to include these on your Full Payment Submission (FPS) if any of the following apply:
- your new employee’s P45 shows deductions should continue — ask your employee to confirm their plan or loan type, or both
- your new employee tells you they’re repaying a student loan — ask your employee to confirm their plan or loan type, or both
- your new employee fills in a starter checklist showing they have a student loan and or postgraduate loan — the checklist should tell you which plan or loan type, or both to use
- HMRC sends you a SL1 start notice — this will tell you which plan type to use
- HMRC sends you a PGL1 start notice — this will tell you they have a postgraduate loan
- you receive a generic notification service (GNS) student loan or postgraduate loan, or both, reminder — ask your employee to confirm their plan or loan type, or both
If your employee does not know which plan or loan they’re on, ask them to check which repayment plan they are on. If they cannot tell you, use Plan 1 in your payroll software until you get a student loan start notice (SL1). Defaulting to Plan 1 is only available for Plan 1, Plan 2 or Plan 4 loans.
Employee has more than one plan type
When the employee is on more than one plan, start deductions for the plan with the lowest recovery threshold until you get a SL1. Check the student loan recovery thresholds.
Off-payroll working
If you’re operating off-payroll you are not responsible for deducting student or postgraduate loan repayments for workers engaged through their own companies. The worker will account for student loan obligations in their own tax return.
Find out more about deemed employer responsibilities under off-payroll working rules.
SL1 or PGL1 start notice received
If you receive a SL1 or PGL1 start notice for someone:
- you have never employed, contact the Employer helpline, HMRC will investigate and contact you again if necessary, file away the SL1 or PGL1 start notice
- who claims never to have had a student loan, start making deductions in line with the start notice and continue doing so unless HMRC tells you otherwise, then file away the SL1 or PGL1 start notice
- for whom you’re already making deductions you should:
- check the plan type on the SL1 start notice you have just received
- update your payroll software and start making deductions using the new plan type at the next available pay day if this is different to the one you are currently using
- check the details on the PGL1 and update your payroll software if needed
Your employee should ask for a refund if they think they have overpaid their loan.
If you receive an employee’s P45 after they have started to work for you, ask them to confirm their plan or loan type if:
- they did not tell you, or indicate on their starter information they were a student loan borrower
- there is a gap since their last employment
You should start making deductions from the next payday.
If your employee does not know their plan or loan type they should check which repayment plan they are on to find out.
Do not make any deductions in arrears.
Employees seconded to work in the UK by an overseas employer
Employees seconded to work in the UK by an overseas employer should fill in a starter checklist. If they say that they have a student loan or postgraduate loan, or both, you should to start making these deductions from the next payday.
Find more information in the PAYE and National Insurance contributions guidance.
Generic notification service messages
HMRC will send 4 types of student loan or postgraduate loan GNS reminders.
One is a reminder to start deductions when:
- you submit a Full Payment Submission for an employee who has a student loan or postgraduate loan deduction due
- the FPS shows a figure of nil
This GNS reminder is confirmation that HMRC has sent or is in the process of sending you a SL1 or PGL1 start notice for the employees shown.
The second is a reminder to make deductions using the correct plan type when:
- you submit an FPS for an employee and have selected the plan type from the drop-down box on your payroll software
- the plan type declared on the FPS does not match what HMRC holds for that employee
For each employee shown on the reminder, you should start making the correct deductions from the first available pay day.
You should look at the SL1 or PGL1 start notice or completed starter checklist for details of the correct student loan plan and loan type to use. If you do not have either of these, ask your employee the starter checklist questions. This will allow you to start deductions using the correct plan and loan type.
If you’re paying an occupational pension rather than a salary, you should ignore any student loan GNS message.
The third GNS message, introduced from September 2019, is a reminder to stop student loan or postgraduate loan deductions for an employee from the next available pay date.
This GNS reminder is confirmation that HMRC has sent or is in the process of sending you an SL2 or PGL2 stop notice for the employees shown. This GNS message and the SL2 or PGL2 stop notice will tell you the correct loan or plan type to stop taking deductions from. If you do not have either of these you can ask your employee.
The fourth GNS message, introduced from April 2020, is a reminder not to deduct student loan or postgraduate loan deductions for an employee who either:
- is subject to the off-payroll working rules
- only has an occupational pension rather than a salary
These employees are not liable for student loan and postgraduate loan deductions and you must stop taking these deductions from the next available pay date.
For occupational pensions, refund any student loan and or postgraduate loan deductions you have made within the current tax year to your employee.
For employments subject to the off-payroll working rules from April 2020, you should only refund the deductions taken from payments subject to the off-payroll working rules.
You will receive these reminders as GNS messages to your PAYE Online account. HMRC recommends that you register for email alerts for these reminders and may contact you to make sure the correct deductions begin.
Stopping student loan and postgraduate loan deductions
Stop making student loan or postgraduate loan deductions when:
- you receive an SL2 or PGL2 stop notice from HMRC
- in exceptional circumstances, HMRC ask you to stop making deductions — if this is the case they’ll tell you in writing, or by phone and then in writing
SL2 or PGL2 stop notice received
Stop making deductions from the first available payday after the deduction stop date shown on the notice. The ‘first available payday’ is the first payday on which it’s practical to apply that notice.
If the borrower is still employed by you and you use Basic PAYE Tools for this employee edit the employee details in the employer database. You can do this by removing the student loan or postgraduate loan borrower indicator and keeping the SL2, or PGL2 stop notice. You can download Basic PAYE Tools.
If the borrower is no longer employed by you and you have not submitted leaver details to HMRC:
- leave the box headed ‘Enter ‘Y’ if student loan deduction is to be made’ blank
- submit leaver information in Real Time Information and provide employee with P45 parts 1A, 2 and 3
If you have submitted leaver details you should keep the SL2 or PGL2 stop notice.
You cannot stop making deductions because your employee asks you to. Your employee should ask for a refund if they think they have overpaid their loan.
Employee dies
Do not make any deductions from any payments made after an employee dies as these payments are not subject to Class 1 National Insurance contributions. This applies even though the payment may relate to a period prior to death, for example, unpaid wages.
Employee leaves
If you make a payment to a borrower who is no longer your employee, work out the deductions on the same amount, and for the same earnings period, as for employer’s secondary Class 1 National Insurance contributions.
When an employee leaves, check if you’re making student loan or postgraduate loan deductions.
When student loan or postgraduate loan deductions should continue
If you receive:
- a SL1 or PGL1 start notice with a start date in the current or a previous tax year
- a P45 with a ‘Y’ in box 5
- starter information indicating student loan or postgraduate loan deductions apply
You should:
- fill in P45 with ‘Y’ in box 5 indicating student loan deductions should continue
- send leaver information to HMRC in Real Time Information and give your employee P45 parts 1A, 2 and 3
- enter ‘Y’ on P45 box 5 even if your employee has not earned enough to make student loan or postgraduate loan repayments
When student loan or postgraduate loan deductions should not continue
If you receive either:
- a SL2 or PGL2 stop notice
- written instructions from HMRC to stop making deductions
- a SL1 or PGL1 start notice with a start date which is after they leave your employment
You should:
- fill in P45 leaving box 5 blank
- send leaver information to HMRC in Real Time Information and give your employee P45 parts 1A, 2 and 3
Employee has more than one job
If an employee has more than one job you should ignore earnings from the other employer.
If the employee has more than one job with you follow the aggregate rules if they apply. Otherwise treat both employments separately.
Change of pay interval
If the interval between the payments of an employee’s earnings changes, for example, from weekly to monthly, you need to adjust the deductions for the new earnings period.
Work out the student loan or postgraduate loan deduction from the first payment after the change based on the new earnings period. This may mean you include details of pay and deductions already included in the last pay period before the change.
If you have included a payment already made in the first of the new longer periods, you should take the following into account when working out the deduction for the new period as a whole:
- any payment that is already made
- the deduction worked out on it
Example
You pay an employee repaying on Plan 1 £500 weekly. The pay interval changes to monthly in the third week of the month. The monthly pay is £2,000. The £2,000 payment in week 4 is made up of the two £500 payments made in weeks 1 and 2 plus £1,000 for weeks 3 and 4.
Week 1 — student loan deductions on pay of £500 are £7 (weekly pay).
Week 2 — student loan deductions on pay of £500 are £7 (weekly pay).
Week 3 — the employee is now monthly paid and receives no pay in this week.
Week 4 — student loan deductions on pay of £2,000 are £15. £14 has already been deducted so the amount now due to be deducted is £1 (£15 minus £14).
You can find more information on what to do if the interval between the payment of an employee’s earnings changes in Chapter 1 of the guide to PAYE and National Insurance contributions.
The guidance given for National Insurance contributions purposes also applies to student loan deductions.
Errors deducting student loan or postgraduate loan repayments
Follow this process unless you have received an SL2 or PGL2 stop notice. If you’ve received a SL2 or PGL2 stop notice you must not make any refund. Instead, your employee should contact the Student Loans Company.
Current tax year
If you have made an over deduction and you can repay it to the borrower during the current tax year you should do so, amending your year-to-date payroll records.
If you cannot repay it, contact the Employer Helpline.
If there’s been an under-deduction and you can collect it from the borrower in the current tax year you should do so. Correct your year-to-date payroll records to reflect what was actually deducted.
If you cannot collect it, contact the Employer Helpline.
During each period you can only collect an additional amount less than, or equal to, the amount that is due to be deducted in that period.
| Example | Amount |
|---|---|
| Under-deduction in week 8 | £25 |
| Deduction from tables in week 9 | £15 |
| Under-deduction recovered in week 9 | £15 |
| Maximum total deduction | £30* |
(*that is, £15 week 9 deduction + £15 under-deduction)
You may recover the remaining £10 under-deduction in later pay periods following the above rules.
Previous tax year
If you have submitted your final FPS for that year you do not need to take any further action. If asked, you should tell your employee to contact the Student Loans Company.
If you have not submitted your final FPS for that year for any over-deductions you can repay the employee and amend your records so the final FPS reflects the correct amounts. For under-deductions you do not need to take any further action. Further deductions will cover repayment of the balance of the loan.
Variable interest rates
From April 2017, the Student Loans Company set interest rates for Plan 2 loans based on an individual’s income. The FPS you make gives this income information, and HMRC passes it to the Student Loans Company. There is no action for you to take but some employees may ask you to check and confirm the information you have sent to HMRC.
Sharing PAYE information with the Student Loans Company: more frequent data sharing
From April 2019, HMRC started to send the student loan and postgraduate loan repayment information reported on your FPS to the Student Loans Company more frequently throughout the tax year. Known as ‘more frequent data sharing’, this means that there will be regular updates on your employee’s student loan or postgraduate loan, or both, balance. There is no action for you to take but some employees may ask you to check and confirm the information you have sent to HMRC.
Employees working abroad
Employee paid from the UK
If you’re operating PAYE as though the employee were in the UK continue to make student loan or postgraduate loan deductions no matter how long they’re working abroad.
Employee paid locally abroad
If you pay a borrower abroad you must update your employment details to have a repayment schedule set up.
Court orders and how they affect student loan and postgraduate loan deductions
In addition to student loan and postgraduate loan deductions, you may have to consider a court order such as an attachment of earnings order or deduction of earnings order.
The order and amount of student loan and postgraduate loan deductions depends on whether the:
- Attachment of earnings order or deduction of earnings order is a priority or non-priority order
- Attachment of earnings order or deduction of earnings order is based on specific or percentage amounts
- total deductions including student loan or postgraduate loan, or both, deductions means your employees pay is less than the protected earnings level specified in the court order
Order of deduction in England, Wales and Northern Ireland
Priority order — percentage based
Some priority orders — Council tax or Community Charge attachment of earnings orders or Income Support Deduction notices — are percentage deductions.
Do not deduct any student loan or postgraduate loan repayments until all such orders are paid in full.
Attachment of earnings orders issued by Magistrates’ Courts under The Courts Act 2003 Regulations are percentage based. You should still treat these as ‘Priority order — specific amounts’ and work out the student loan and postgraduate loan deduction as normal.
Priority order — specified and non-specified amounts
If there is no specified level of protected earnings:
- Apply the priority order against the borrower’s attachable earnings before making student loan or postgraduate loan deductions.
- Work out the student loan and postgraduate loan deductions using payroll software or the SL3 student loan deduction tables.
If there is a specified level of protected earnings:
- Apply the priority order against the borrower’s attachable earnings before making student loan or postgraduate loan deductions.
- Work out the postgraduate loan and student loan deductions with postgraduate loan deductions taking priority before student loan deductions.
- Check the deduction of court orders, postgraduate loan or student loan deduction does not reduce the available income below the level of protected earnings.
When the deduction of court orders, postgraduate loan and student loan reduces the available income below the level of protected earnings, the maximum amount of deductions is the difference between the:
- net attachable earnings after deduction of the attachment of earnings order or deduction of earnings order
- level of protected earnings rounded down to the nearest pound, if negative, set to zero
Non-priority orders
Take away student loan or postgraduate loan deductions before non-priority court orders.
Order of deduction in Scotland
Scottish court order
Do not make any deductions for student loan, or postgraduate loans if you’re required to apply any of the following:
- an Earnings Arrestment
- a current Maintenance Arrestment
- a Conjoined Arrestment Order
Deduction of earnings order
Make student loan, or postgraduate loan deductions after the deduction of earnings order, which is a priority order. The employee’s pay must not fall below the protected earnings level.
Scottish court orders and deduction of earnings orders
Do not make any student loan, or postgraduate loan deductions if you have a deduction of earnings order and a Scottish court order to apply.
Scottish Debt Arrangement Scheme
Collection of student loan or postgraduate loan deductions (or both) is not affected by instructions to make deductions under the Debt Arrangement Scheme.
Repayment of teachers’ loan scheme
This scheme is no longer available.
Record keeping
You should keep records of the following for at least 3 years after the end of the tax year to which they relate:
- all wages relating to the calculation and deduction of student loan or postgraduate loan repayments
- other documents relating to the calculation and deduction of student loan or postgraduate loan repayments
- SL1 and PGL1 start notices and SL2 and PGL2 stop notices
Enter the amount of student loan and postgraduate loan deductions in the appropriate box on your employee’s FPS, and P60 (whole pounds only).
Updates to this page
Published 15 July 2014Last updated 6 April 2024 + show all updates
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Plan and loan type thresholds updated for 2024.
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The thresholds for making student loan deductions have been updated for the tax year 2023 to 2024.
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Rates, allowances and duties have been updated for the tax year 2022 to 2023.
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Information on what deductions to make for employees who have more than one plan has been added.
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Rates, allowances and duties have been updated for the tax year 2021 to 2022.
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Guidance has been updated to include information if you are operating off-payroll and new Plan type 4.
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Information about a fourth Generic Notification Service (GNS) message has been added.
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This guide has been amended for the 2019 to 2020 tax year.
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Contact details for Student Loan Company enquiries have been updated.
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Generic Notification Service (GNS) messages section updated.
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Rates, allowances and duties have been updated for the tax year 2019 to 2020.
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Rates, allowances and duties have been updated for the tax year 2018 to 2019.
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Guidance added to explain what employers must do after receiving a Generic Notification Service (GNS) reminder for Student Loans.
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Additional content has been added under 'Starting Student Loan deductions and checking plan type' for employers who receive SL1 start notices for employees from whom they are not required to make National Insurance deductions.
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Changes made to cover overpayments due to a change of repayment plan type and circumstances where an employer should use default plan 1.
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This updated guide replaces the E17 Employer Helpbook. This contains full guidance on how to deduct Student Loans and covers the introduction of a second repayment threshold.
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First published.