Compliance
tax year 2021/22, and payroll teams will need to ensure they are applying the correct plan to employee payroll records. With four deduction options, it’s important to remember that plans one, two and four cannot run concurrently. If employers are deducting student loan, employees should only have a deduction for either plan one, two or four. However, the postgraduate deduction can be taken alongside any of the other plans. Updates The new starter checklist was updated in April 2021 to allow employees to indicate the correct student loan plan to be applied through payroll. This is an essential tool since the P45 remains unchanged, with all plan types included in a single tick box, providing no indication of which plan type the employee should have deducted. Changes ahead In February 2022, the government announced plans to add a new student loan plan to the existing structure. This formed part of the announcement on
plans to create a fairer higher education system for students and taxpayers. Plan five will be introduced for students who start their courses on or after September 2023. It has not yet been confirmed exactly when the plan will come into effect for students to begin to repay for those loans. In February 2022, the government announced plans to add a new student loan plan to the existing structure
plan to another, as there was when plan four was introduced. The government has confirmed the threshold will remain at £25,000 until 2026/27. For students, they will repay the student loan for a longer term, up to 40 years. It’s expected this change will increase the number of borrowers who repay their loan in full. The government has also opened a consultation on lifelong loan entitlement, which will give a broader range of students access to borrowing. In the long term, this could change the population of employees who have student loan deductions taken from their pay. The consultation can be accessed here: http://ow.ly/csTp30scIxH. n The policy team at the CIPP remain an active part of Her Majesty’s Revenue and Customs’ collection of student loans forum, representing the voice of the payroll profession. If you have a viewpoint that you would like to feed into this group, use your voice by emailing policy@ cipp.org.uk .
This new plan will have a threshold of £25,000 before the student will start to repay their loan and will impact new borrowers only. This will mean there will be no movement from one student loan
MAKE SURE YOU’RE UP TO DATE WITH THE LATEST CHANGES
CPD 7 points
Payroll update
ONLY £192+VAT* FOR MEMBERS
This focused update course represents the single best opportunity to be briefed and updated on changes affecting payroll.
This course covers: ● Tax and NI contributions ● Operating pay as you earn (PAYE) ● Statutory pay and leave ● Statutory deductions ● Expenses and benefits ● Pension ● Employment rights and other matters
Book online today at cipp.org.uk/training
*Price correct at time of print
15
| Professional in Payroll, Pensions and Reward |
Issue 79 | April 2022
Made with FlippingBook - Online magazine maker