In this section:

  • Employee has a student loan

Employee has a student loan

If an employee has a student loan to repay, in most cases you will be responsible for making the necessary deductions from their pay.

On this page:

When to start making student loan deductions

You will need to make student loan deductions if any of the following apply:

  • a new employee gives you a P45 with a Y marked in box 5 'Student Loan deductions to continue'
  • a new employee gives you a P46 with an entry in box D for Student Loans - remember that you can obtain the required P46 information by email or on your own stationery as long as you keep a record of where it came from
  • HM Revenue & Customs (HMRC) sends you a Start Notice form SL1 and the employee's total pay exceeds the student loan threshold

If HMRC sends you a form SL1 and the employee's total pay exceeds the student loan threshold, you must start making deductions from the first available payday following the start date indicated on it.

Please note that if you've registered and activated the 'PAYE Online for employers' service, HMRC will automatically send you form SL1 online unless you specifically request that paper versions of PAYE notices should continue to be sent to you. For more information, follow the link below.

More about receiving and viewing PAYE notices online

Top

How to make student loan deductions

Deductions should be calculated on the same gross pay amount used to calculate National Insurance contributions (NICs).

If you're using HMRC’s P11 Calculator, tick the student loans box in the employee's record on the Employee Database and deductions will be calculated automatically. Most commercial payroll software will also automate the process.

If you're using a paper form P11 Deductions Working Sheet or equivalent record, you can work out the amount to deduct each pay period using the Collection of Student Loans Calculator that comes as part of HMRC’s Basic PAYE Tools package, or manually using the Student Loan Deduction Tables SL3.

Downloadable calculators

A set of the Basic PAYE Tools is available to download straight to your computer. In addition to the student loans calculator, the tools include:

  • an employer database on which you can record your employees’ details
  • a P11 calculator that will work out and record your employees’ tax, NICs and student loan deductions every payday with a linked P32 Employment Payment record that works out what you need to pay HMRC
  • a range of other calculators that work out, for example, statutory payments
  • interactive forms such as P11D working sheets
  • a Learning Zone - including interactive learning material on student loan deductions

Download Basic PAYE Tools from the Business Link website (Opens new window)

For more information see our guide on calculating and recording student loan deductions - use the link below.

Calculating and recording student loan deductions

Download Employer Helpbook E17, 'Collection of Student Loans' (PDF 203K)

Top

When to stop making deductions

We will send you a Stop Notification form SL2 when it's time to stop making student loan deductions from an employee. You must stop making deductions from the first available payday after the stop date indicated on form SL2.

As with form SL1, HMRC will automatically send you form SL2 online if you've registered and activated the 'PAYE Online for employers' service.

More about receiving and viewing PAYE notices online

Top