Update to guidance on student loan and posgraduate loan repayments

24 February 2021

HMRC has updated guidance relating to the repayment of both student and postgraduate loans for employers. The changes highlight the implications of the introduction of the new Scottish student loan plan – plan type four and provide information for businesses who may be operating off-payroll.

An announcement was made by the First Minister back in June 2018 that, following a review of student support, the Scottish Government intended to increase the plan one student loan threshold from £19,390 to £25,000. This would mean the creation of a new student loan plan type – plan type four, to be implemented from 6 April 2021. The guidance page includes reference to student loan plan type four that employers should be aware of.

Where businesses are operating off-payroll, they are not responsible for the deduction of student or postgraduate loan repayments for workers engaged through their own companies. The worker will be required to account for their student / postgraduate loan within their own Self-Assessment tax return. Further guidance on fee-payer responsibilities is available online.

There are four types of student loan or postgraduate Generic Notification Service (GNS) messages that HMRC sends, and the fourth type is to remind employers not to take student or postgraduate loan deductions from employees who are subject to the off-payroll working rules, or those who only have an occupational pension, and not a salary. These employees should not have student or postgraduate loan deductions taken via the employer’s payroll, and so deductions must not be taken from the next available pay date onwards.

For employments subject to the off-payroll working rules from April 2021, only student and postgraduate loan deductions taken from payments subject to the off-payroll working rules should be refunded.


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