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HMRC internal manual

Collection of Student Loans Manual

SL repayments: underpayments and overpayments: employer under-deducts loan repayments

This situation could arise if the employer fails to operate a Start Notice or misunderstands the Student Loan Deduction Tables.

Error discovered in year

If the under-deduction is discovered in year, or before the End of Year forms and final Full Payment submission (FPS) has been sent to HMRC, the employer should

  • Consider recovering, within limits, the under-deduction from the borrower during subsequent pay periods. See the notes below
  • Remit to HMRC the amounts actually deducted in the normal way


  1. There is no obligation on the employer to recover an under-deduction resulting from a simple error. The priority is to ensure that correct deductions are made in future
  2. The employer cannot recover an under - deduction of Student Loan repayments in excess of the amount of Student Loan repayments due for the period in which the recovery is to be made

Example: If the employer has under-deducted Student Loan repayments in the sum of £18 then, the following scenario could arise

Week Earnings SL deduction Underpayment recovered
16 £400 £6 £6 (max)
17 £600 £24 £12 (bal)

Error discovered after the end of the year

If the error is discovered after the End of Year forms have been submitted to HMRC, the employer should

  • Take no action to collect the under-deduction from the borrower


1. The borrower’s account with the Student Loans Company will be credited with the amounts actually deducted. The error would normally extend the repayment period and increase the amount of interest charged by the Student Loans Company.
2. If the borrower has an SA record then any over or under-deduction will normally be taken into account as part of the self assessment and any resulting underpayment included in the balancing payment.