WHEN does repayment to the Student Loans Company (SLC) kick in?
For courses starting from 1998, repayments start and continue when income exceeds pre-determined thresholds. The amount deducted is 9% of gross income. This can be calculated and taken weekly, monthly or annually via the payroll department. Employees subjected to PAYE will generally get the deductions applied weekly or monthly depending on the payroll type. Self Employed workers will account for it annually when tax returns are made. Thresholds and rates can be found on the SLC website here or on the HMRC web page here.
WHEN does the Employer pass on amounts deducted to the SLC?
The figure for deducted student loan repayments is included on the P60 and passed to the SLC at the end of the financial year by the HMRC. This figure is the total amount deducted by the current employer in the tax year.
SO what is the problem?
Well, the figure on the P60 does not include the amounts paid and deducted by ex-employers in the same tax year.
Have a look at the following scenario, assuming tax year 2012-2013 ie 6 April 2012 to 5 April 2013:
Mr A started work with Employer A Ltd in May 2012. Mr A left in June 2012. £300 was deducted from his pay. A P45 was issued to Mr A.
Mr A started work with Employer B Ltd in July 2012. Mr A left in Dec 2012. £500 was deducted from his pay. A P45 was issued to Mr A.
Mr A started work with Employer C Ltd in Jan 2012. Mr A was still in employment with this company at the end of the financial year. £400 was deducted from his pay. A P60 was issued to Mr A stating the total pay and tax deducted in the year from ALL employers BUT only the loan payment deducted by that employer in the year, ie £400!
Mr A would have to trust his ex employers to pass on the deductions made from his pay on their annual returns!
YOU need to take some responsibility BUT HOW can you go about this?
Firstly, gather or obtain your student loan statement(s) from the SLC.
Secondly, gather together or obtain your payslips from present and previous employers.
Thirdly, obtain your P60s.
Fourthly, reconcile all deductions against the ones on the statements from the SLC.
Fifthly, inform the SLC of any discrepancy and if necessary, request your record be updated.
Lastly, keep an eye on future deductions and be aware of when the end date of your loan is or should be.