When you set up student loans for an employee, sometimes they have more than one loan to repay. HMRC's advice in this case is that you deduct one student loan through your payroll software. Unless otherwise instructed by HMRC, set the employee up with the student loan plan type with the lower repayment thresholds.  NOTE: For further questions or clarification around which student loan type to use, speak to HMRC.
Multiple student loans Identify which student loan has the lower repayment thresholds, and set that student loan up in Sage 50 Payroll. You can check these thresholds in your software: - Select Payroll then Change Process Date.
- Set a date within the tax year you'd like to check.
- Select Company then Legislation.
- Go to the Student/Postgraduate tab and check the thresholds as required.
- When you're finished, select OK.
Example ▼ Click here if you'd like to see an example. A monthly employee has both a Plan type 1 and Plan type 2 student loan. - The repayment threshold for Plan type 1 in the 25/26 tax year is £2,172.08 per month
- The repayment threshold for Plan type 2 in the 25/26 tax year is £2,372.50 per month
Set up the employee with a Plan type 1 student loan. This ensures the student loan repayments begin at the earliest point, and HMRC allocate any repayments to the relevant loans.
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