STUDENT LOANS AND PENSIONS

03 December 2010

Last week the policy team notified members that HMRC had confirmed that student loans should be deducted from any earnings up to age 65yrs. This was in response to the team investigating with the Employer Helpline to seek clarification after a number of members had received Student Loan Start Notices for pension payrolls. When HMRC provided the text in the document published, the team were as surprised as anyone that HMRC stated that it doesn’t matter if not Nicable pay; these were the rules.

The team challenged the Helpline who were adamant this advice was correct as student loans they said could also be deducted from self employed earnings via self assessment. The policy team argued that self employed earnings are subject to National Insurance albeit a different class but again the rules were outlined in the document.

Since then as expected the team have investigated with HMRC colleagues responsible for student loans, who have now confirmed that student loans are only deductable from NICABLE earnings and therefore the start notices issued to the pension payrolls are INCORRECT.

Therefore please accept our apologies for notifying you of what we believed to be accurate, albeit conflicting advice in respect of student loans and non Nicable earnings.

The team have removed last week’s text from our website.