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Student and postgraduate loans from 6 April 2021

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Summary

This guide covers student and postgraduate loan changes from 6 April 2021 and using Sage 50cloud Payroll.

Description

Student and postgraduate loans thresholds and rates from 6 April 2021

  • Plan 1 – £19,895, earnings above this threshold continues to be calculated at 9%.
  • Plan 2 – £27,295, earnings above this threshold continues to be calculated at 9%.
  • Plan 4 – new plan type, Scottish Student Loans (SSL) £25,000, earnings above this threshold will be calculated at 9%.
  • Postgraduate loan (PGL) – £21,000, earnings above this threshold continues to be calculated at 6%.

You can find out more from Gov.uk


Start notice (SL1/PGL1)

It is important that you:

  • Check your HMRC online account for either student loan or Postgraduate loan, or both, start and stop notices.
  • Take the correct action to start student and or postgraduate loan deductions as soon as possible.
  • Record the deductions correctly on your Full Payment Submission (FPS).

This ensures any employees who have these loans don't pay any more or less than necessary.

TIP: You can set up the IR Secure Mailbox in Sage 50cloud Payroll to receive notifications and messages from HMRC. Read more > 


If you receive a SL1 and or PGL1 from HMRC, it is important that you:

  • Use the correct loan or plan type.
  • Check the start date shown on the notice and take deductions from the next available pay day.

You can set up and process student and postgraduate loans in Sage 50cloud Payroll. Read more >


Off-payroll working rules

Organisations are not responsible for deducting either student loan or postgraduate loans, or both, for workers engaged through their own companies. The worker will account for either student loan or postgraduate loan, or both, obligations in their own tax return. Read more >


Scottish student loans

From 6 April the Scottish Government is introducing a new plan type for Scottish student loan borrowers known as Plan 4.

This change impacts employers across the UK, not only those located in Scotland. It applies to employers who have employees paying back their loan from Student Award Agency for Scotland (SAAS).

HMRC notifies employers by a student loan start notice, SL1 for all affected employees.

The HMRC starter checklist has been updated to reflect this new plan type and will be available on Gov.uk before of the start of the new tax year. 


Next steps

You can follow our simple step guide to set up student and postgraduate loans within Sage 50cloud Payroll. Read more >

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