The second option is to freeze the threshold for new borrowers only. This will mean that only borrowers starting courses in academic year 2016-17 and subsequent years will be affected. These borrowers will generally expect to start repayment in April 2020. The threshold will be frozen from April 2020 for five years at the same level that the existing post-2012 borrowers’ loan threshold has reached by then. This option reduces government debt, but considerably less than option 1. It constitutes a new student loan plan, and therefore has operational demands and administrative costs associated with it.
CIPP survey on freezing the student loan repayment threshold 18 August 2015
The Government is asking for views on freezing the student loan repayment threshold for either all post-2012 borrowers or for only new borrowers. The CIPP survey has only three questions so should only take a moment or two of your time.
The government’s consultation details 2 options:
1. keeping the loan repayment threshold at £21,000 for all students from April 2016, or; 2. freezing it at the level it will have reached in 2020 only for new borrowers starting in academic year 2016-7 and repaying from April 2020.
The consultation states that the preferred option is to freeze the threshold for all plan-2 (post-2012) loans thereby changing the intention to raise thresholds annually in line with earnings.
Please take 2 minutes to answer our short survey to help inform the CIPP’s response to this consultation.
The survey will close on 3 September 2015. Thank you in advance for your time and input.
Student loan repayment threshold Plan 2 20 August 2015
HMRC’s August Employer Bulletin provides further details of the new student loan repayment threshold being introduced in April 2016.
From 6 April 2016 a new student loan threshold of £21,000 will be introduced and will be known as a Plan 2 loan. If you have employees repaying under the existing threshold, they will be will unaffected by the change and these existing loans will be described as a Plan 1 loan. Current employer guidance around the existing threshold can be found on GOV.UK.
We have been working with software developers so from 6 April 2016 all software recognised by HMRC will calculate student loan deductions based on either a Plan 1 or a Plan 2 threshold.
Key facts
CIPP Policy News Journal
25/04/2016, Page 430 of 453
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