Student Loan Recovery
If your employee has a student loan on Plan 1 and they are earning £19,895.00 gross per year (£1657.91 gross per month, £382.59 gross per week) or more, student loan repayments must be deducted from their gross salary at a rate of 9%. If your employee has a student loan on Plan 2 repayments start once they are earning £27,295.00 gross per year (£2274.58 gross per month, £524.90 gross per week).
We will make these deductions on the payroll as soon as we are made aware of them either by HMRC sending us a student loan notification or by receiveing a P45 or P46/Starter Checklist with the student loan shown on it.
It is important to remember that if there is a gross contractual agreement between the employer and employee then the student loan will be deducted from the net pay. If there is a net contractual agreement between the employer and employee then the employee will receive the same net pay and the employer will receive increased costs as the student loan will be paid by the employer and in addition to this it will increase the gross salary which will then also increase the tax and NI costs as well.