PAYE46025 - employer returns: employer return post capture: collection of student loans (CSL)
This subject is presented as follows
Background
From April 2000, HMRC took on responsibility for the collection
of Student Loan repayments. For employees (it is anticipated that
around 90% of borrowers will be employees) this will mean that
their employers will be making Student Loan deductions (SLDs)
through the payroll.
This applies to students who commenced a course in higher
education during or after the 1998/99 academic year.
Repayments on a student loan will not start until the 6 April
following the date on which a borrower completes (or otherwise
leaves) a course and will be dependent on their level of income.
Employers can find more details in booklet E17
‘Employer’s Guide for Collection of Student
Loans’ available from the employers section of the hmrc
internet at www.hmrc.gov.uk.
Student Loans Company (SLC)
The SLC is funded by the Educational Departments in England,
Scotland and Northern Ireland.
The SLC will
- Provide HMRC with details of borrowers who have completed their course. This will enable a match to be made with HMRC computers to issue Start Notices to employers, advising them to make deductions
- Keep a record of loan balances
- Inform HMRC when a Stop Notice should be issued to an employer where a loan is due to be repaid in full
- Take over responsibility to collect any remaining balance or repay any amounts over-deducted
- Collect payments from borrowers outside the UK
Definition of earnings
Earnings for the student loan deduction purposes will be
identical to the measure of earnings computed for the purpose of
deducting Class 1 National Insurance Contributions.
Student Loan repayments are not a deduction for tax or NIC
purposes.
Student Loan deductions (SLD)
Student Loan deductions are made on a non-cumulative basis and
are based on a percentage
rate of the
borrowers earnings in excess of the annual
threshold.
An employer will use monthly or weekly thresholds based on an
apportionment of the annual threshold. A Student Loans Deductions
Table is provided to assist an employer in the calculation of SLDs.
As deductions are non-cumulative an employer will not be
expected to pay deductions back to an employee where their earnings
previously over the threshold go below the threshold for a period.
Similarly, an employee’s earnings which due to a bonus
payment for example, take them over the threshold would not be
expected to have SLDs made against all the previous pay
periods.
Payment to HMRC
The employer should
- Keep separate details of the SLDs
- Pay over SLDs together with PAYE and NICs collected during the same period
The amount of SLD payable to Banking Operations will be included in the tax figure on the payslip.
Starting SLDs
An employer should only commence SLDs where
- A Start Notice has been received from HMRC
- The employee hands the employer a P45 with a ‘Y’ in the box marked ‘Student Loan’
Or
- The employee hands the employer a P46 with a tick in Box D, marked ‘Student Loan’
A Start Notice will be issued at least 6 weeks before the date
on which the employer is required to take on responsibility for
making SLDs.
If the employer or taxpayer complains that the Start Notice
is clearly inappropriate then you should
- Advise the employer to make no further deductions whilst enquiries are made. The employer can file the SL1
- Contact the East Kilbride Student Loans Unit (details below), inform them that the employer has received an incorrect SL1 notice and ask them to investigate
A P45 should be actioned by the employer as soon as reasonably
possible.
There are no other circumstances under which an employer is
required to make deductions.
Stopping SLDs
An employer will normally be advised to stop making SLDs by
means of a Stop Notice issued by HMRC.
There may be other occasions where an employer will be
required to cease making deductions before a Stop Notice is
received these are
- Where the employee leaves
Or
- The employee dies
In both of these situations the employer should deduct SLDs to
the final pay day and then enter a ‘Y’ in the
appropriate box on the form P45.
There are no other circumstances under which an employer
should cease making deductions without specific authority from
HMRC.
If an employee advises an employer that their loan has been
repaid in full the employer will not be able to confirm this. The
details about the loan are retained by the SLC. The employer must
continue to deduct SLDs until the Stop Notice is received. If there
are any disputes the employee will need to take this up with the
SLC.
If an employee leaves but receives a further payment after a
P45 has been issued the employer must deduct loan repayments from
the further payment unless a Stop Notice has been issued by HMRC to
that employer.
East Kilbride Student Loan Unit (EKSLU)
A CSL Unit ‘East Kilbride Student Loans’ has been set up in Centre 1 to
- Handle enquiries from the Student Loans Company (SLC) where a student disputes the deductions made from their earnings
And
- Process any repayments of incorrect deductions to the student
If you receive any queries on Student Loan discrepancies that
you are unable to answer you should in the first instance refer
these to your office’s ‘Student Loan expert’ to
deal with. If they are not available
you will be able to contact the unit and arrange
for them to handle these discrepancies.
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Note: These numbers are not given out to employers or taxpayers
Reporting SLDs on returns
Employers are required by law to report Student Loan deductions.
They must
- Enter the SLDs on forms P14
And
- Enter total amount of SLDs for all employees on form P35
The Student Loan Service or (SLS) is the computer IT support for
the collection of Student Loans. This computer will pass details
automatically to both BROCS and the Employer Business Service (EBS)
of any Student Loan employers by setting an indicator on both
computers.
(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)
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Freedom of Information Act 2000)
(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)
Liaison with East Kilbride Student Loan Unit and Amended P14s
From October 2004 the East Kilbride Student Loan Unit (EKSLU)
will no longer be able to manually correct Student Loan deduction
figures submitted on forms P14. Any amendments agreed with the
employer will require the employer to submit additional P35 and P14
to correct the end of year entry relating to Student Loan
deductions.
EKSLU will contact the employer and request that they send an
additional return to their responsible office. They will then
forward a stencil to advise you of their actions. The Action Guide
‘Collection Of Student Loans (CSL)’
PAYE46026 explains the actions you must
take to deal with these stencils.
Liaison with East Kilbride Student Loan Unit - Incorrect NINO on P14
Where EKSLU identify a P14 with an incorrect NINO they will contact the employer to confirm
- The correct NINO
Or
- The correct date of birth and gender
EKSLU will prepare Stencil C and forward this with a copy of all the P14s, printed from the e-Services filestore, with incorrect NINOs. The Action Guide ‘Collection Of Student Loans (CSL)’ PAYE46026 explains the actions you must take to deal with these stencils.
