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HMRC internal manual

Collection of Student Loans Manual

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HM Revenue & Customs
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SL repayments: borrower within PAYE: special situations

Specific situations may arise which could cause problems for employers in ascertaining

  • Whether or not Student Loan deductions are applicable

And / or

  • What earnings period to use for calculating Student Loan deductions

The general principle in deciding how to treat income for Student Loan deductionpurposes is to follow the normal rules for NICs. The Employers Guide CWG2 gives the employer comprehensive instructions on operating NIC deductions.

The following areas have been identified as causing possible problems. This list is not, however, comprehensive and you should refer the employer to the normal NICs rules in the Employers Guide CWG2 in cases of difficulty.

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Payments made after the death of an employee

Any payments made after an employee has died should not be taken into account for calculating Student Loan deductions.

This applies even though the payment may relate to a period prior to death, for example, unpaid wages.

However, these payments may be taken into account for calculating Student Loan repayments through the SA return, if one is issued for the year of death.

 

Payments made to borrower after employment ceases

If a payment is made to a borrower after the borrower has ceased employment, the Student Loan deductions should be calculated on the same amount, and for the same earnings periodas for NICs.

 

Employees with more than one job

An employer should disregard for Student Loan purposes any earnings from another employer.

However, if a borrower has more than one job with the same employer, follow the NIC aggregation rules.

 

Employees not paid at regular intervals but who can be treated as paid at regular intervals

 

If a payment is not made at regular intervals, there may be a regular pattern covering theperiod for which each payment is made. In such cases, that regular pattern will determinethe earnings period for NICs purposes, and should be followed for Student Loan purposes.

 

More than one set of regular payments

For NICs purposes, if an employee is paid more than one set of regular payments, allpayments should be added together and NICs calculated using the shorter of the regularintervals between payments. The same rule applies for Student Loan deductions.

However, special rules apply where the earnings are derived from different types ofemployment, for example, contracted - out and not contracted - out.

 

Employees not paid on their usual pay day

If an employee is paid on a day other than the usual pay day, for example, if the pay dayhas been brought forward because of a Bank Holiday, or if two weeks wages are paidtogether

 

  • If the actual date of payment and the usual pay day are in the same tax year

    • The early or late payment should be treated as if it had been made at the usual time
  • If the actual date of payment and the usual pay day are in the different tax years

    • Student Loan deductions should be calculated on the early or late payment separately from any other payments made in that tax year, using the earnings threshold and rate of deduction appropriate to the year in which the payment is actually made

See the examples in the Employers Guide CWG2.

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Holiday Pay

There are various methods of calculating NICs on holiday pay depending upon the particularcircumstances and which method is more convenient for the employer.

Whichever method of calculation is used for NICs purposes, the same method must be applied to Student Loans.