About CSL: overview of student loans: role of employer
It is the employers’ role to
- Start and cease deduction of Student Loan and or Postgraduate Loan repayments following the receipt of Start Notices and Stop Notices from HMRC, when a form P45 is received with a ‘Y’ in the SL box or when the employee tells the employer he or she is in the process of repaying an Income Contingent Repayment loan.
- Update their payroll software so that it will calculate the weekly or monthly amount of Student Loan and or Postgraduate Loan repayments
- Deduct the Student Loan and or Postgraduate Loan repayments from the borrower’s pay using the correct Loan type or Plan Type - Plan 1 or Plan 2.
- Account for the Student Loan and or Postgraduate Loan amounts deducted to Banking Operations along with tax and NIC
- Include the amount of Student Loan and or Postgradaute Loan deductions on the monthly Full Payment Submission (FPS). payslips and the end of year P60
Identifying borrowers who are liable to make repayments
This is not the responsibility of the employer.
The responsibility for identifying borrowers lies with the Student Loans Company who will inform HMRC as part of the matching exercise.
If a successful match is made with a PAYE record a Start Notice is issued to the employer.
The employer must commence making deductions of Student Loan and or Postgradaute Loan repayments, (subject to the level of income), when,
- A Start Notice is received from HMRC
- A form P45 is received with a ‘Y’ in the box headed ‘Student Loan Deductions to continue’ or
- When gathering ‘starter checklist’ information the employee tells the employer they are in the process of repaying an Income Contingent loan, Plan type 1 or 2 and or Postgraduate Loan.
Under no other circumstances should an employer start making Student Loan and or Postgradaute Loan deductions.
Similarly, the employer should continue making Student Loan and or Postgraduate Loan deductions, subject to the income threshold for the correct Loan and or Plan Type until either
- A Stop Notice is received from HMRC
- Specific authority is received from HMRC to stop making deductions
Deductions made by the employer
On receipt of a Start Notice (SL1, PGL1), the employer should make deductions using the correct Loan and or Plan Type on their payroll software. For further information see CSLM17060.
Student Loan and or Postgraduate Loan deductions are
- Non - cumulative and
- Deducted from earnings (as calculated for employer’s secondary Class 1 NIC) alongside tax and NIC
Full details of the employer’s responsibilities are given in CSLM17000 onwards.
Handling employers’ queries
If the employer is a new employer they should contact the NESI Help Line on 0300 200 3211.
In other cases they should contact the Employers Help Line on 0300 200 3200.
Note: An employer should not contact the Student Loans Company under any circumstances. If an employer queries a loan on behalf of an employee, then the employee should contact the Student Loans Company.