CSLM17025 – SL repayments: borrower within PAYE: start / stop notices and forms P45 and P46

There are circumstances in which HMRC may automatically issue a Start Notice, or a Stop Notice, even though a form P45 has been handed in to a new employer. This is because the HMRC computer will compare the Student Loan status of the taxpayer with the entry on the form P45.

A Start Notice will also be issued where the employee has ticked box D (Student Loans) on a form P46.

These situations are summarised below.

Employee is a borrower

If there is a 'Y' in the box headed 'Continue Student Loan Deductions' on form P45

• The new employer makes Student Loan deductions
• Deductions continue until employer receives a Stop Notice from HMRC

Note: HMRC will not issue a Start Notice

If the employee ticks box 'D' (Student Loans) of form P46

• The new employer makes Student Loan deductions
• Deductions continue until employer receives a Stop Notice from HMRC

Note: HMRC will issue a Start Notice, which the employer can file

If the box headed 'Continue Student Loan Deductions' on form P45 is blank

• The new employer will not make Student Loan deductions

Note: HMRC automatically issues a Start Notice confirming the start date from which deductions should commence

Employee is not a borrower

If there is a 'Y' in the box headed 'Continue Student Loan Deductions' on form P45

• The employer makes Student Loan deductions

And

• HMRC automatically issues a Stop Notice confirming the date from which deductions should cease

If the box headed 'Continue Student Loan Deductions' on form P45 is blank

• The employer will not make Student Loan deductions

And

• HMRC will not issue a Stop Notice

Example 1 - Borrower commences employment and completes a P46 but does not tick box D (Student Loans)

The employer sends the P46 to HMRC

• A PAYE record is set up for the borrower (or the existing record is updated)
• The PAYE record matches with the Student Loans Company record
• A Start Notice is sent to the employer
• The employer notes records that the employee is a borrower
• Student Loan deductions commence

You need take no action.

Example 2 - Borrower commences employment and completes a P46 and ticks box D (Student Loans)

The employer sends the P46 to HMRC

• The employer notes records that the employee is a borrower
• Student Loan deductions commence
• A PAYE record is set up for the borrower (or the existing record is updated)
• The PAYE record matches with the Student Loans Company record
• A Start Notice is sent to the employer. The employer should file the Start Notice

You need take no action.

Example 3 - New employee hands in form P45 with a 'Y' in the box headed 'Continue Student Loan Deductions'

• The new employer forwards the form P45(3) to HMRC
• The new employer notes his or her records that the employee is a borrower
• Student Loan deductions commence
• The Student Loan signal on the form P45(3) is automatically matched against the taxpayer’s computer record and

You need take no action.

Example 4 - New employee hands in a form P45 with no entry in the box headed 'Continue Student Loan Deductions'

• The employer takes no action regarding Student Loan deductions
• The employer forwards the form P45(3) to HMRC
• The form P45(3) is automatically matched against the taxpayer’s PAYE record

If the taxpayer is not a borrower

• No further action is required

If the taxpayer is a borrower

• A Start Notice is sent to the employer
• The employer notes his / her records that the employee is a borrower
• Student Loan deductions commence from the date on the Start Notice

You need take no action.