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HMRC internal manual

Collection of Student Loans Manual

From
HM Revenue & Customs
Updated
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FAQs: employers questions and answers: new employee: P45 has a 'Y' in the SL box - t/p is not a borrower

Suggested answer

If the form P45 has a ‘Y’ in the Student Loan box you should start making deductions from the next pay-day.

However, give me full details of the employee and I will check out the position and phone back.

HMRC action

  • Contact the Student Loans Company and verify whether the taxpayer is a borrower
  • If the taxpayer is a borrower - tell the employer to make deductions, using the HMRC Basic PAYE Tools (https://www.gov.uk/government/publications/basic-paye-tools-user-guide) or approved payroll software from the next pay-day
  • If the taxpayer is not a borrower

    • Tell the employer to ignore the ‘Y’ on the form P45 and not to make any deductions
    • Explain that a Stop Notice should be issued in due course. This should be filed away
    • Confirm your instructions in writing and retain a copy of the letter

Notes:

1. This is one of the very few scenarios where an employer can stop making deductions before a Stop Notice is received.
   
2. The need to confirm the instructions to the employer in writing is to protect the employer in the event of a compliance visit.