Statistical first release for Student Loans in England for 2014-15 financial year 30 June 2015
The Department for Business Innovation & Skills recently published the statistical first release on loan outlays, repayments of loans and borrower activity for English domiciled students.
Figures included are for Income Contingent Repayment (ICR) Loans, which were introduced in 1998/99 and cover publicly owned loans only.
You will be aware that repayment Plan 1 refers to students who began their course prior to 1st September 2012. Payments for Repayment Plan 1 loans are at the rate of 9% of income above the repayment threshold which for the 2015-2016 tax year is £17,335. For students who began their course on or after 1st September 2012, they will repay their loan under the Terms and Conditions for repayment Plan 2 and their repayment threshold is set at £21,000 from April 2016. They will make repayments at 9% of their income above the threshold.
Borrowers would normally be liable to make repayments from the April after they leave their course, but for administrative reasons, repayments will not be taken through the tax system until April 2016.
Plan 1 and Plan 2 will not be repaid concurrently. In cases where a borrower has both types of loan and the plan 1 loan becomes repaid, no stop notice will be issued to the employer but a plan 2 SL1 will be issued. This will mean there is no interruption to loan repayments. The plan 1 loan will in effect stop as soon as the plan 2 SL1 is applied to payroll and the employees earnings exceed the relevant threshold. Guidance for employers will be available later in the year – if you have any questions that you would like the guidance to include that will help you understand how to process Plan 2 student loan repayments, please contact the CIPP policy & research team at policy@cipp.org.uk .
HMRC issue guidance points on Plan 2 student loans 3 July 2015
HMRC Software Developer Support team have brief guidance for software developers about the operation of Student Loan deduction under Plan 2, which will begin from April 2016 for the employers of borrowers in England or Wales who began the first year of their course on or after 1 September 2012. 1) From 6th April 2016 there will be two types of Student Loan deduction. Deductions taken under the current scheme will be known as Plan type 1 and there will be a new type of deduction called Plan Type 2. This new Plan Type 2 deduction applies to borrowers in England or Wales who began the first year of their course on or after 1 September 2012.
2) The plan type to use for new student loan deductions will be shown on the SL1 start notifications. SL1 notifications for Plan Type 2 will first be issued in March 2016 for repayments starting from 6 April 2016.
3) For new employees the plan type will be an option to complete on the Starter Checklist but it will not be shown on form P45.
4) Employers will only ever have to deduct either Plan Type 1 or Plan Type 2 deductions. It is possible for employees to have both types of loan, but only one plan type will be in operation at any one time. Allocation to the two loan types will be done by the Student Loans Company therefore this allocation process is not visible to the employer or HMRC. The employer only has to apply the plan type deduction as informed by the start notification or the starter checklist.
5) Any plan type change will be advised via a new start notification stating the new plan type to operate.
6) If a new employee does not know the plan type they should contact the Student Loans Company or check here . However, if for whatever reason the employee has not been able to establish the plan type then a Plan Type 1 should be operated until confirmation is received from the employee or HMRC via the start notification.
7) There will be no change to current reporting requirements in RTI. Plan type is not reported, only the amount.
8) The deduction rate for both plan types will be 9%.
9) The 16/17 threshold for Plan Type 1 is usually announced by the Dept. for Business, Innovation & Skills (BIS) in August but the Plan Type 2 threshold has been announced and will be £21,000.
CIPP Policy News Journal
25/04/2016, Page 428 of 453
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