Student loan repayments
You should make student loan deductions if any of the following apply:
- your new employee’s P45 shows that deductions should continue
- your new employee tells you they’re repaying a student loan, for example on a starter checklist
- HM Revenue and Customs (HMRC) sends you form SL1 or form PGL1 and your employee earns over the income threshold for their loan
What you need to do
If your new employee needs you to make student loan repayments, ask them which type of loan they have and record this in your payroll software. It will automatically calculate and make deductions.
If your employee has Plan 1 and 2 loans, ask them to check with the Student Loans Company which plan to use for deductions. If they cannot tell you, record Plan 1 in your payroll software until you get a student loan start notice (SL1).
Report these deductions to HMRC when you pay your employee.
In some cases there are special rules for making student loan deductions. Examples include:
- you’re sent a court order to collect a debt directly from your employee’s earnings
- you change how often you pay your employee, such as from weekly to monthly
- the employee has more than one job with you and you need to aggregate earnings
HMRC will send you form SL2 or form PGL2 if you need to stop deducting student loan repayments from your employee’s pay. Do not stop making deductions if an employee asks you to.