Student loans

Student 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.

Starting the student loan

Loan repayment plans

There are three types of student loan repayment plans. The SL1 notification you receive from HMRC specifies the plan for your employee.

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. Also read the E17 Collection of Student Loans helpbooks.

When to start deductions

HMRC may notify you in various ways to start 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, contact the HMRC Employer Helpline on 0300 200 3200. 

How to set up the deduction

Before you can assign a postgraduate loan to an employee, you must set up the deduction.

Read Set up a student loan deduction.

Stopping the loan deduction

Once the deduction starts, continue to make student loan deductions from the employee. Only stop deducting if notified by HMRC.

Read Stop a student loan deduction.

Repaying your student loan

Postgraduate loans