CSLM2030 - About CSL: overview of student loans: role of employer

It is the employers’ role to

  • Start and stop deductions of student and postgraduate loan repayments following the receipt of start and stop notices from HMRC or when a form P45 is received with a ‘Y’ in the SL box or if the employee tells the employer they are in the process of repaying a student or postgraduate loan or the employee completes a starter checklist indicating they are in repayment of a student or postgraduate loan.
  • Update their payroll software so that it will calculate  amount of student and or postgraduate loan repayments.
  • Deduct the student and postgraduate loan repayments from the borrower's pay using the correct loan  or plan type - postgraduate  and or Plan 1 or Plan 2 or Plan 4 or Plan 5.
  • Account for the student and postgraduate loan amounts deducted to Banking Operations along with tax and nantional insurance contributions.
  • Include the amount of student and postgraduate loan deductions on the full payment submission, payslips and the end of year P60.

Identifying borrowers who are liable to make repayments

This is not the responsibility of the employer.

The responsibility for identifying borrowers lies with the Student Loans Company who will inform HMRC as part of the matching exercise.

If a successful match is made with a PAYE record a start notice is issued to the employer.

The employer must start making deductions of student and postgraduate loan repayments, (subject to the level of income), when,

  • A Start Notice is received from HMRC

Or

  • A form P45 is received with a 'Y' in the box headed 'Student Loan Deductions to continue' or
  • When gathering ‘starter checklist’ information the employee tells the employer they are in the process of repaying plan type 1 or 2 or 4 or 5 and or postgraduate loan.

The employer should continue making student and postgraduate loan deductions, subject to the income threshold for the correct loan and or plan type until either

  • A Stop Notice is received from HMRC

Or, exceptionally

  • Specific authority is received from HMRC to stop making deductions


Top of page

Deductions made by the employer

On receipt of a Start Notice (SL1, PGL1), the employer should make deductions using the correct loan and or plant type on their payroll software. For further information see CSLM17060.

Student and or Postgraduate loan deductions are

  • Non - cumulative and
  • Deducted from earnings (as calculated for employer’s secondary Class 1 NIC) alongside tax and NIC

Full details of the employer's responsibilities are given in CSLM17000 onwards.

Top of page

Handling employers' queries

If the employer is a new employer they should contact the NESI Help Line on 0300 200 3211.

In other cases they should contact the Employers Help Line on 0300 200 3200.

Note: An employer should not contact the Student Loans Company under any circumstances. If an employer queries a loan on behalf of an employee, then the employee should contact the Student Loans Company.