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 and your employee earns over the income threshold for their repayment plan

What you need to do

If your new employee needs you to make student loan repayments, ask them which plan they’re on and record this in your payroll software. It will automatically calculate and make deductions.

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 send you form SL2 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.

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

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

    1. Assess if they need to be put into a workplace pension

    You have ongoing responsibilities to check if your employees need to be put into a workplace pension scheme.

    1. Check what your ongoing responsibilities are
  5. Step 4 Agree a contract and salary

  6. Step 5 Tell HMRC about your new employee