Tell HMRC about a new employee

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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 or a postgraduate 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

You should follow these steps even if your employee has a P45 from their last job.

Ask your new employee if they have a student loan or a postgraduate loan - they may have both. If they finished their studies after 6 April in the current tax year, they will not start to repay their loan until the next tax year.

Record their answer in your payroll software. You do not need to calculate their loan recovery repayments - your payroll software will do this for you.

If your employee has a student loan, ask them to sign in to their repayment account and check which plan to use for deductions. They can contact the Student Loans Company if they’re still not sure.

If they cannot tell you, use Plan 1 in your payroll software until you get a student loan start notice (SL1).

Where the employee is on more than one plan, start deductions for the plan with the lowest recovery threshold until you get an SL1. Check the student loan recovery thresholds.

Report these deductions to HMRC when you pay your employee.

Special rules

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

Stopping deductions

HMRC will tell you if you need to stop making loan deductions from your employees’ pay. They’ll send you:

  • form SL2 for student loans
  • form PGL2 for postgraduate loans

Do not stop making deductions if an employee asks you to.

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Part of Employ someone: step by step

  1. Step 1 Check your business is ready to employ staff

    1. Prepare your business to take on employees

  2. Step 2 Recruit someone

    You need to advertise the role and interview candidates. You can use a recruitment agency to do this or do it yourself.

    1. Find out about recruiting someone yourself on Acas
    2. Find out about using a recruitment agency

    As an employer you must make sure you recruit employees fairly.

    1. Avoid discrimination during recruitment
    2. Make your application process accessible for employees with disabilities or health conditions

  3. and Check they have the right to work in the UK

    1. Find out how to check an applicant's right to work

  4. and Find out if they need a DBS check

    You may need to check someone's criminal record, for example, if they'll be working in healthcare or with children.

    1. Find out if you need a DBS check
    2. How to do a DBS check

  5. Step 3 Check if they need to be put into a workplace pension

    Check if you need to put your employee into a workplace pension scheme:

  6. Step 4 Agree a contract and salary

    When someone accepts a job offer they have a contract with you as their employer.

    1. Check what the National Minimum Wage is for different ages
    2. Check what the National Minimum Wage is for different types of work
    3. Check what to include in a contract
    4. Agree a written statement of employment particulars

  7. Step 5 Tell HMRC about your new employee

    You must tell HMRC about your new employee on or before their first pay day.

    1. Tell HMRC about a new employee
    2. Get their personal details and P45 to work out their tax code
    3. If you don’t have their P45, use HMRC’s ‘starter checklist’
    4. Check what to do when you start paying your employee