Employer prompts for student loan deductions

25 April 2016

From 6 April 2016 HMRC will send a generic notification if you don’t report any student loan deductions for a specific employee when a deduction is expected in your payroll submission. The generic notification is a prompt for you to check and make the correct deductions for future pay periods.

HMRC’s latest Employer bulletin highlights the introduction of an employer prompt. The notifications will be titled:

  • No Student Loan Deduction Prompt 1
  • No Student Loan Deduction Prompt 2.

If you have been sent a prompt, it will be delivered to your inbox along with your GNS messages. You should check your inbox regularly to ensure you can act on any prompts.

If you receive a prompt instructing you to start student loan deductions, you will need to ask your employee which plan type they are repaying, or refer to the SL1 Start Notice if you have it. You should record this in your payroll software to ensure deductions start at the next available payday using the correct plan type.

If you don’t act on a student loan prompt and your next payroll submission doesn’t show a student loan deduction HMRC will send you a second prompt. If you don’t act on the second prompt, HMRC may contact you by telephone to ensure you start to make deductions. This may be time consuming for you, and could impact on your employee’s student loan repayments.

If you need help, more information about student loan deductions see Student loans: information for employers and employees (CSL2).

You can minimise the impact on your time when dealing with employees who have student loans by:

  • Regularly checking your inbox for online notices
  • Implementing SL1 and SL2 notices at the first available payday
  • Checking carefully that you are making deductions against the correct plan type (you’ll find the plan type information on form SL1, the starter checklist or by asking your employee)
  • Asking your employee to contact Student Loan Company if they don’t know their plan type.

Full details on introduction of plan type can be found in February’s Employer Bulletin.