CSLM17025 - SL repayments: borrower within PAYE: start / stop notices Real Time Information (RTI) and forms P45

There are circumstances in which HMRC may automatically issue a Start Notice, or a Stop Notice, even though a form P45 has been handed in to a new employer. This is because the HMRC computer will compare the Student Loan status of the taxpayer with the information on the first Full Payment submission (FPS) sent by an employer for a new employee.

Before the introduction of RTI this compare would have happened whenever a form P45 or the now withdrawn form P46 was received by HMRC.

Within RTI the form P46 has been withdrawn and whilst employers are still required to complete a form P45 (for a departing employee) employers must no longer send part 1 of that form to HMRC.

These situations are summarised below.

Employee is a borrower

If there is a ‘Y’ in the box headed ‘Student Loan Deductions to continue’ on form P45

  • The new employer asks the employee to complete the starter checklist to establish what loan and or plan type the employee has
  • The new employer makes Student and or Postgraduate Loan deductions
  • Deductions continue until employer receives a Stop Notice from HMRC

If the box headed ‘Student Loan Deductions to continue’ on form P45 is blank

  • The new employer will not make Student Loan deductions

Note: HMRC automatically issues a Start Notice confirming the start date from which deductions should commence

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Employee is not a borrower

If there is a ‘Y’ in the box headed ‘Student Loan Deductions to continue’ on form P45

  • The new employer asks the employee to complete the starter checklist to establish what loan and or plan type the employee has
  • If the employee declares they do not have a Student and or Postgraduate Loan the employer should contact HMRC

If the box headed ‘Student Loan Deductions to continue’ on form P45 is blank

  • The employer will not make Student Loan deductions

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Example 3 - New employee hands in form P45 with a ‘Y’ in the box headed ‘Student Loan Deductions to continue’

  • The new employer asks the employee to complete the starter checklist to establish what loan and or plan type the employee has
  • The new employer notes his or her records that the employee is a borrower
  • Student and or Postgraduate Loan deductions commence
  • The first FPS received for the new employee is automatically matched against the taxpayer’s computer record and
  • If the taxpayer is a borrower - no further action is required
  • If the taxpayer is not a borrower - HMRC may contact the employer

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Example 4 - New employee hands in a form P45 with no entry in the box headed ‘Student Loan Deductions to continue’

  • The employer takes no action regarding Student and or Postgraduate Loan deductions
  • The first FPS received for the new employee is automatically matched against the taxpayer’s PAYE record

If the taxpayer is not a borrower

  • No further action is required

If the taxpayer is a borrower

  • A Start Notice is sent to the employer
  • The employer notes his / her records that the employee is a borrower
  • Student and or postgraduate loan deductions commence from the date on the Start Notice

You need take no action.