Starting the loan deduction Loan repayment plans Unlike student loans, there’s just one type of postgraduate loan repayment plan. For tax years 2024/25 and 2025/26, the repayment thresholds are: | Plan Type | Weekly (£) | Monthly (£) | Annual (£) | Rate (%) | | Postgraduate | 403.84 | 1,750.00 | 21,000.00 | 6.00 | The loan only deducts if the employee’s earnings for NI are over the thresholds above. When to start taking deductions HMRC may notify you in various ways to start making postgraduate loan deductions: - You receive a Start Notice, form PGL1, from HMRC. The start date will be at least six weeks from the date of issue.
- A new employee gives you form P45 and there’s a Y in the Postgraduate Loan deductions box.
- A new employee provides you with a Starter Checklist form. They select Yes to say they have an unpaid graduate loan.
How to set up the deduction You can create this within the Pay Run or in Settings. Once set up, add it to the employee in the PAY section of processing a pay run. ▼Set up a postgraduate loan deduction - Select the Settings tab.
- Select Payments & Deductions.
- Select the Deductions tab, then Create New Deduction.
- For Deduction Category, select Student Loans.
- For Deduction Type, select Postgraduate Loan (PGL).
- Edit the name and description, if required.
- Select Save.
You’ve now set up the deduction and can apply it at the Edit Pay stage of a pay run. for more information on this, read Edit Pay during a pay run.
Stopping the loan deduction Once the deduction starts, continue to make postgraduate loan deductions from the employee. Only stop deducting if notified by HMRC. When to stop taking deductions There are also different ways you're notified to stop making postgraduate loan deductions: - HMRC sends you a form PGL2 Stop Notification
- If you need to stop making deductions quickly, HMRC may request you to stop by phone or letter.
How to stop the deduction To stop a postgraduate loan deducting, remove the deduction from the employee in the pay run. This won't delete the postgraduatet loan from the payroll system. It just removes it from the selected employee. ▼Steps to stop the deduction - Select Pay Puns from the menu bar.
- Select Process Pay Run for the selected pay cycle.
- Confirm the pay date and select Next.
- Deal with any absences and select Next.
- Select the relevant employee and select the X button next to the Postgraduate loan deduction.
- Complete the rest of the pay run.
The deduction hasn't stopped or was taken in error You’ll need to edit the previous pay run and remove the deduction. The FPS will include these changes to inform HMRC. You can repay the post graduate loan taken in error through payroll. For more information, read Correct a completed pay run. Does it affect a previous tax year? If the changes stretch over a previous Payroll Year End, send a Supplementary FPS. Do this once you process up to the last period of the affected tax year. For more information, read Supplementary FPS. |