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HMRC internal manual

Collection of Student Loans Manual

Compliance: employer compliance: employer’s obligations

An employer is authorised to make Student Loan deductions from an employee following receipt of

  • A Start Notice (SL1) issued by HMRC
  • Information obtained as part of the ‘Starter checklist’ procedures which all employers must undertake


  • A P45 where the previous employer has inserted a ‘Y’ in the box headed ‘ Student Loan Deductions to continue’

A Start Notice specifies a start date from which deductions should be made and deductions must start on the first available pay day after that date. Start Notices are issued on an on-going basis as they are matched to borrower’s records. A P45 will apply from the date of receipt by an employer.

Employers should continue to make deductions until either a Stop Notice (SL2) is received or the employment comes to an end. An employer must not stop making deductions on instructions from an employee, for example, if the employee advises them that the loan has been repaid.

Occasionally, an HMRC office will give instructions to start or stop Student Loan deductions verbally over the telephone but this is confirmed in writing and the employer should retain the written copy in the employment records.

Deductions, which are non- cumulative, are a percentage rate of a borrowers earnings above the annual threshold.

Employers must follow the NIC rules, including those for aggregation of earnings, to determine the earnings liable to Student Loan deductions.

When employment of a borrower ceases the employer must complete the deduction of Student Loan repayment statement on the P45, that is, complete box 5 which says ‘Enter ‘Y’ if Student Loan deductions is due to be made’. On receipt of a P45 where the Student Loan statement has been completed a subsequent employer must continue to make Student Loan deductions.

A Start Notice is only issued to new employers where

  • The above checklist information has not been completed


  • The borrower’s record contains a CSL indicator

Employers are required to provide the employee and the Department with a record of Student Loan deductions.