From 6th April 2023, there are new earnings thresholds for student loan repayments.
How much an employee has to repay depends on their income. They will repay a percentage of income over the ‘threshold’ for their type of loan.
The new thresholds are as follows:
- Plan 1 loans: £22,015 – up from £20,195
- Plan 2 loans: £27,295
- Plan 4 loans: £27,660 – up from £25,375
- Plan 5 loans £25,000 – a new type of student loan from 6 April 2023
- Postgraduate loan: £21,000
If an employee has more than one job, they will only make repayments from the job where they are paid over the threshold, not the combined income.
New Repayment Rates
The deductions for loan repayments for plans 1, 2, 4 and 5 are 9% above the threshold and 6% above for postgraduate loans..
What Does This Mean For My Business?
Your payroll software should calculate the deductions automatically, assuming that your software is up-to-date.
If an employee’s earnings are below the limits and you receive an SL1 or PGL1 notice from HMRC, you should note your payroll records to ensure that deductions are not missed if the employee’s pay is increased.
Help from James & Uzzell
If you need help with payroll for your business, we can help. We are specialist accountants based in Swansea who can help your business. Contact us today to see how we can help.