Student Loans 2019
Student loans seem to cause some confusion, and this is not really surprising. There are two types loan from this tax year, Student Loans and Postgraduate Loans. The Student Loan is then further divided to plan 1 or plan 2 depending on when the student started their course.
Student Loan Reporting
If an employee has a Student Loan but is not sure which plan it is then, then the default is plan 1. The Student Loan details are reported in the Full Payment Submission (FPS), which is part of the Real Time Information (RTI) submitted to HMRC with the payroll.
If the loan or plan type is incorrect HMRC will issue a notice to change, start or stop the loan. This can then be applied through the payroll. In the past HMRC faced criticism for being slow to share information with the Student Loans Company (SLC), and vice versa, so deductions could be taken for far longer than they should be. From April HMRC have been sharing information with SLC on a weekly basis.
The aim is for the employee and SLC to have increased and more timely visibility of all repayments made. Although it is still early days for this process hopefully this will be of benefit to all parties. It should be noted the increased onus on employers to ensure the correct information is supplied via the FPS.
The thresholds for the tax year starting April 2019 are:
£18 935 annually, or £1577.91 per month
£25 725 annually, or £2143.75 per month
Both plan types are calculated at 9% above these thresholds.
Post Graduate Loans
£21 000 annually, or £1750 per month
Repayments are calculated at 6% above this threshold
Further information on Student Loans including guidance is available here.