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.
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 for Continue Student Loan Deductions
- a new employee gives you a P46 with a tick in box D for Student Loans
- 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
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 the P11 Calculator on the Employer's CD-ROM 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 on the Employer CD-Rom, or manually using the Student Loan Deduction Tables SL3. For more information see our guide on calculating and recording student loan deductions - use the link below.
More about calculating and recording student loan deductions
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
More useful links
Download Employer Helpbook E17, ‘Collection of Student Loans’ (PDF 248K)
