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HMRC internal manual

Collection of Student Loans Manual

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HM Revenue & Customs
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About CSL: overview of student loans: introduction

The Education (Student Loans) (Repayment) Regulations 2000 and with effect from 6 April 2009 the Consolidated Education (Student Loans) (Repayment) Regulations 2009 have changed the nature of higher education funding following the introduction of a new Student Loan scheme. Operation of the new scheme involves HMRC, the Department for Business Innovation and Skills, (BIS), and the Student Loans Company working in partnership.

From April 2000 HMRC became responsible for collecting repayments of Student Loans in respect of the new style loans, known as income contingent. Students, however, continue to receive these loans from the Student Loans Company, which retains responsibility for administering all loans, and for collecting repayments from borrowers not resident in the UK.

Where the borrower’s tax affairs are handled under PAYE the employer deducts Student Loan repayments from pay using payroll software, the HMRC Basic PAYE tools or the Student Loan Deductions Tables. Copies of the tables are available to download from the gov.uk website

A borrower who receives a Self Assessment return has to self assess the Student Loan repayments. The net amount due under Self Assessment, after deducting any payments under PAYE, is due as part of the balancing payment.

These new procedures apply to the majority of loans made to new borrowers from August 1998. Students already undertaking courses in August 1998 may obtain additional loans relating to that course after that date. These would not fall within the new scheme, although if the borrower subsequently started a new course, for example a post graduate course, then a new - style loan would be available.

From 6 April 2016 two student loan thresholds known as Plan 1 and Plan 2 were introduced.  The plan type an employer should operate will be shown on the Student Loan start notice (SL1) that they receive from us.  Alternatively, their employee can contact the Student Loans Company to find out this information.

To handle the collection of student loans a computer, the Student Loans Business Service (SLBS), has been developed. The Student Loans Business Service

  • Has links to the Student Loans Company
  • Holds information on borrowers

And

  • Passes information to and from our existing computers

Terminology

You are used to the term ‘repayment’ meaning money that is paid by HMRC to the taxpayer. In the context of Student Loans, however, the term ‘repayment’ refers to loan repayments made by the borrower, either by deduction from pay or by direct payment, to either HMRC or the Student Loans Company.

This Manual makes it clear what is intended. You must however take care when answering queries from employers that there is no misunderstanding over this point. It will be rare for an employer to refund loan repayments to a borrower as the deductions are non - cumulative.