Student Loans - Collection
STUDENT LOANS - COLLECTION Introduced on 1st April 2000, the scheme passed responsibility to employers for: deducting student loan repayments from an employee’s earnings • paying deductions recovered to HMRC • advising the borrower and HMRC of amounts recovered and paid over. COPYRIGHT © 2021 THE CHARTERED INSTITUTE OF PAYROLL PROFESSIONALS The employer is not responsible for: • identifying employees who are liable for student loan repayments, except in the case of new employees (this is the responsibility of HMRC) • responding to enquiries from employees about the loan (this is the responsibility of the Student Loans Company). HMRC advise the employer of an existing employee against whom deductions are to commence by issuing a Start Notice - SL1. New employees with a continuing loan are identified by the entry ‘Y’ in the correct student loan (SL) box on form P45 or the appropriate statement on the new employee declaration form. When issuing a form P45 to a leaver it is the employer’s responsibility to complete the correct student loan box if a Start Notice has been received even if no deductions have been made. The employer may cease deductions only when advised by HMRC. This will usually be on receipt of a ‘Stop Notice (SL2)’. Exceptionally HMRC may directly request by telephone that deductions cease and in such cases a ‘Stop Notice’ will be issued in confirmation. Start and stop notices should be implemented on the first reasonably practical pay day after the date of issue shown on the notice. Under the Repayment of Teachers’ Loan Scheme (RTL) (now ended) teachers in certain shortage subjects had their loan written off by DfES for each year they remain teaching that subject. The RTL scheme ran outside the SL1/SL2 process and was controlled by letters exchanged between SLC and the borrower who in turn informed the employer when loan repayments were suspended due to an RTL scheme being in operation. The scheme ended in 2005 but the remaining teachers on the scheme were able to continue to have their loan paid off as the scheme ran until 2015. No printing, copying or reproduction permitted. Since December 2009 the SLC Student Loan Company has moved borrowers to direct debit for the last 23 months of the predicted loan period to avoid fluctuations of earnings leading to an over-repayment. Employers will simply be issued with an SL2 stop notice in these situations. From April 2019 SLC put into operation a More Frequent Data Sharing (MFDS) process in order to obtain the necessary information from employers more often and since September 2019 HMRC decided formally to use the GNS process to inform employers of important changes to an employee’s deduction. This will only be used when HMRC believes the employer has been sent the required start (SL1) or stop (SL2) notices and then notes that the instruction has not been implemented and requires the employer to implement or cease deductions. Employers continue to be advised that only the SL1 and SL2 notices can force a change to the payroll as these satisfy statutory requirements. The SL1 satisfies the requirements of section
135
Made with FlippingBook - Online magazine maker