Tag: Student Loans

Student and postgraduate loan thresholds from April 2023

The student loan plan and postgraduate loan thresholds and rates from 6 April 2023 are as follows:

plan 1: £22,015
plan 2: £27,295
plan 4: £27,660
postgraduate loan: £21,000

Deductions for:

plans 1, 2 and 4 remain at 9% for any earnings above the respective thresholds
postgraduate loans remain at 6% for any earnings above the respective threshold

Student loan plans, loan types and thresholds guidance will be updated on 6 April 2023 with the new thresholds.

Student and postgraduate loan start notices

If you receive a student loan start notice (SL1) or postgraduate loan start notice (PGL1) from HMRC, it is important that you check and use the correct:

loan or plan type on the start notice
start date shown on the notice

This makes sure your employee does not pay any more or less than they have to.

If an employee’s earnings are above the respective student loan and postgraduate loan thresholds, and you do not take deductions, HMRC will send you a generic notification service prompt as a reminder. If deductions still haven’t started, we may contact you directly.

If an employee’s earnings are below the respective student loan and postgraduate loan thresholds, you should:

update the employee’s payroll record to show they have a student loan and or postgraduate loan
file the start notice

Deductions should continue until HMRC notifies you to stop.

More information is available on starting student loan and postgraduate loan deductions — checking plan and loan type guidance.

Repaying Your Student Loan

When you start repaying

You’ll only repay your student loan when your income is over the threshold amount for your repayment plan. The threshold amounts change on 6 April every year.

The earliest you’ll start repaying is either:

the April after you leave your course
the April 4 years after the course started, if you’re studying part-time

Your repayments automatically stop if either:

you stop working
your income goes below the threshold

If you have a Plan 1 student loan

You’ll only repay when your income is over £382 a week, £1,657 a month or £19,895 a year (before tax and other deductions).

If you have a Plan 2 student loan

You’ll only repay when your income is over £524 a week, £2,274 a month or £27,295 a year (before tax and other deductions).

If you have a Plan 4 student loan

You’ll only repay when your income is over £480 a week, £2,083 a month or £25,000 a year (before tax and other deductions).

If you’re on a Postgraduate Loan repayment plan

If you took out a Master’s Loan or a Doctoral Loan, you’ll only repay when your income is over £403 a week, £1,750 a month or £21,000 a year (before tax and other deductions).

Early repayments

There’s no penalty for paying some or all of your loan off early.

Student Loan and Postgraduate Loan Repayment

Plan and loan types and thresholds

With effect from April 2019, the thresholds for making Student Loan deductions are:

Plan 1 – £18,935 annually (£1577.91 a month or £364.13 a week)
Plan 2 – £25,725 annually (£2143.75 a month or £494.71 a week)

Repayments for Plan 1 and Plan 2 are calculated at 9% of the income above the threshold.

Postgraduate Loans (PGL) – £21,000 (£1750 a month or £403.84 a week)

Repayments for PGL are calculated at 6% of the income above the threshold.

Starting Student loan and PGL deductions, checking plan and loan type

You should work out the correct figure of employee earnings on which Student Loan and PGL deductions are due. The figure to use is the same gross pay amount that you would use to calculate your employer’s secondary Class 1 National Insurance contributions.

From 6 April 2019 your employee may be liable to repay a PGL at the same time as a Plan 1 or Plan 2 loan. If so, they’ll be due to repay 15% of the amount they earn over the threshold.

Start making Student Loan and PGL deductions from the next available payday using the correct plan and loan type, which you will select on your HMRC submission, if any of the following apply:

your new employee’s P45 shows deductions should continue – ask your employee to confirm their plan and loan type
your new employee tells you they’re repaying a Student Loan – ask your employee to confirm their plan and loan type
your new employee fills in a starter checklist showing they have a Student Loan – the checklist should tell you which plan type and loan type to use, if your employee has both plan type 1 and 2, ask them to check with the Student Loan Company for the correct plan type to take deductions under otherwise, default to plan type 1 until you receive a student loan start notice SL1 that HMRC sends you
HMRC sends you form SL1 ‘Start Notice’ – this will tell you which plan type to use
HMRC sends you form PGL1 ‘Start Notice’ – this will tell you they have a PGL
you receive a Generic Notification Service Student Loan reminder – ask your employee to confirm their plan and loan type

If your employee does not know which plan or loan type they’re on, ask them to check with the Student Loan Company (SLC). If they’re still unable to confirm their plan or loan type, start making deductions using Plan type 1 until you receive further instructions from HMRC – defaulting to Plan 1 is only available for Plan 1 or Plan 2 loans.

More detailed information can be found here