Student and postgraduate loans

Student and postgraduate loans provide financial support to UK students pursuing higher education

Any loans that an employee took out after August 1998 are repayable through your payroll.

We explain when and how to deduct student and postgraduate loans in Payroll.

There are 3 types of student loan repayment plans, plus postgraduate loans. The SL1 notification you receive from HMRC specifies the plan for your employee.

From 6 April 2024, the repayment thresholds are:

Student loans only deduct if the employee’s earnings for NI are over the threshold set by HMRC.

For more information refer to the HMRC SL3 Student Loan Deductions tables (opens in new tab). Also read the E17 Collection of Student Loans helpbooks (opens in new tab).

When to start and stop deductions

There are a number of ways you may be notified to start making student loan deductions:

• You receive a Start Notice, form SL1, 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 Student Loan deductions box.
• A new employee provides you with a Starter Checklist form. They select Yes to say they have an unpaid student loan.

 NOTE: A starter may provide a P45 or Starter Checklist and indicate they have an unpaid student loan. If you're unsure which type, please contact the HMRC Employer Helpline on 0300 200 3200. 

There are also different ways you're notified to stop making student loan deductions:

• HMRC sends you a form SL2 Stop Notification
• If you need to stop making deductions quickly, HMRC may request you to stop by phone or letter.
• A teacher gives you a letter from the Student Loans Company. This may state they're accepted on the Repayment of Teachers’ Loan scheme.

Once the deduction starts, continue to make student loan deductions from the employee. Only stop deducting if you receive one of the items listed above.

If the deduction is not stopped when instructed or has been taken in error

You will need to edit the previous pay run/s to remove the deduction.

The FPS will include these changes for HMRC.

The student loan taken in error can be paid back via payroll, see our correction guide below.

if the changes stretch over the previous Payroll Year End, send a Supplementary FPS.

Send the Supplementary FPS once you process up to the last period of the previous tax year.

Use this guide to help with the steps to Correct a completed pay run.

Set up a student loan deduction

• Read the HMRC article Repaying your student loan