CSLM17010 – SL repayments: borrower within PAYE: when employer should start deducting
There are three circumstances in which an employer should
start making Student Loan deductions from an employee.
- If the employer receives a Start Notice from HMRC authorising
deductions to commence
- If a new employee hands the employer a form P45 with a 'Y' in
the box headed 'Continue Student Loan Deductions'
- If a new employee completes a form P46 and ticks box D (Student Loans)
In no other circumstances should the employer commence making
Student Loan deductions.
You must tell the employer to await a Start Notice, unless
the employee has submitted a form P45 with a 'Y' in the box headed
'Continue Student Loan Deductions' or has completed a form P46 with
a tick in box D (Student Loans).
Start Notices (Forms SL1)
A Start Notice is issued automatically to an employer
when
- A match is made for the first time on a PAYE / SA record and the borrower is due to commence repayment of the Student Loan
- A form P45 is handed in to a new employer for a matched borrower, but no 'Y' has been entered in the box headed 'Continue Student Loan Deductions' and the employment record has a current Student Loan identifier (see below)
- An annual matching process runs in February to identify borrowers who have moved from self employment to employment
The Start Notice gives instructions as to when Student Loan deductions should commence. These are
'Student Loan deductions must start from the first pay day after the start date shown below whenever total pay exceeds the Student Loan threshold’.
The employer should always follow these instructions.
Note: A Start Notice is
not issued annually. It continues to apply until a
Stop Notice is issued, even though this will normally cover a
period of several years
Employer receiving the form P45 – The 'new'
employer
The form P45 includes a box headed 'Continue Student Loan
Deductions' to indicate that the taxpayer is a borrower for whom
Student Loan deductions have been authorised.
If the employee hands in a form P45 with a 'Y' in the box
headed 'Continue Student Loan Deductions' the new employer
should
- Enter a tick in box J headed 'Student Loan Deductions Case’ on form P11
- Commence making Student Loan deductions in accordance with the Student Loan Deduction Tables
If the form P45 contains no entry in the box headed
‘Continue Student Loan Deductions’ the new employer
should
not take any action, even though it may be known
that the borrower has previously been making Student Loan
repayments. If the borrower is liable to make Student Loan
repayments this will be picked up when the P45(3) is processed and
a Start Notice will automatically be issued.
In exceptional cases a new employer may receive a form P45
with a ‘Y’ in the box headed ‘Continue Student
Loan Deductions’, but, the employee is not a borrower. In
these cases, when the form P45(3) is processed a Stop Notice will
automatically be issued to the new employer who may repay any
deductions already made in that employment.
Note: Do
not confuse this with the situation where a
borrower changes employment and a Stop Notice is issued shortly
thereafter because the borrower has repaid the loan. Obviously in
this case no repayment would be made by the employer.
Entering P45(3) details in COP
If a ‘Y’ is present on the form P45 in the box
headed ‘Continue Student Loan Deductions’
- Enter ‘Y’ in the field headed ‘CSL’ in COP function MA
If the box on the form P45 headed ‘Continue Student Loan Deductions’ is blank
- Take no action
Employer action – Borrower starts new employment but
has no form P45
The new employer should follow current procedures regarding
form P46 and so on.
If the employee has ticked box D (Student Loans), the new
employer should
- Enter a tick in box J headed 'Student Loan Deductions Case' on form P11
- Start making Student Loan deductions in accordance with the Student Loan Deduction Tables
The employer will also receive a Start Notice for these cases
provided HMRC confirms that the employee is a borrower. If the
employer has already started to make Student Loan deductions, the
Start Notice can be filed.
If the employee does not tick box D (Student Loans) of the
form P46, the HMRC computer will subsequently check the position
and issue a Start Notice if appropriate. Upon receipt of a Start
Notice, the employer should
- Enter a tick in box J headed 'Student Loan Deductions Case' on form P11
- Start making Student Loan deductions in accordance with the instructions given on the Start Notice
- Enter a tick in box J headed ‘Student Loan Deductions Case’ on form P11
- Start making Student Loan deductions in accordance with the instructions given on the Start Notice
