Statutory Deductions
Student Loans
NOTIFICATION OF A THRESHOLD CHANGE FOR STUDENT LOAN BORROWERS IN THE CURRENT INCOME CONTINGENT REPAYMENT (ICR) SCHEME 25 May 2011 Regulations have now come into force which state that the £15,000 repayment threshold will rise annually from 6 April 2012 by the Retail Prices Index (RPI). The current threshold of £15,000 has applied to student loan borrowers in repayment from 6 April 2005. The Department for Business, Innovation and Skills has confirmed that from 6 April 2012 the threshold will rise by 5.3% to £15,795. This figure will apply to all current borrowers for whom employers make Student Loan deductions. Software developers are being notified as early as possible in order that software changes can be made ready for implementation on 6 April 2012. Further information and guidance will follow in the coming months. CONSULTATION ON POTENTIAL EARLY REPAYMENT MECHANISMS FOR STUDENT LOANS 6 July 2011 As part of the student finance reforms, the government is proposing that graduate contributions will be based on a variable rate of interest related to income and capped at up to RPI plus 3 per cent. So the graduates that earn more will pay more but will still pay less than they would have to pay if borrowing on commercial terms. The government are consulting on proposals that those on the highest incomes after graduation are not able unfairly to buy themselves out of this progressive mechanism by paying off their loans early. The plans are similar to those paid by people who pre-pay their mortgages. These mechanisms would need to ensure that graduates on modest incomes who strive to pay off their loans early through regular payments are not penalised. For example, a five per cent levy might be charged on additional repayments each year over a specified amount such as £1,000 or £3,000. Alternatively, those on higher incomes (e.g. over £60,000) who made an additional repayment could be required to pay a five per cent levy on this sum. Following this consultation, the government will consider the responses and make a decision about what type of early repayment mechanism to implement; this will take into account any operational implications identified. They aim to respond in autumn 2011 with the full details of any proposal. Any necessary changes to legislation would be brought forward in spring 2012, with the aim of implementing any new mechanism for new students taking out loans from academic year 2012/13. Follow this link to read the 10 page consultation document
COLLECTION OF STUDENT LOANS
16 September 2011 HMRC is starting a programme of work to align employer and employment information held on our systems.
CIPP Policy News Journal
09/10/2012, Page 197 of 234
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