24 Nov Student and Postgraduates Loans for 2021
Student and Postgraduate Loans
With the extension of furlough please remember that both Apprenticeship Levy and Student loan deductions will continue where applicable if the employee is furloughed. Grants for the Job Retention Scheme do not cover these.
If you are taking on a new starter who has a student or postgraduate loan then please read on regarding deductions and thresholds.
Starter Checklist – Student and Postgraduate Loans
To help you establish what Student and/or Postgraduate Loan your new employee has ask them to complete the Student and Postgraduate Loan section of the starter checklist which you can find here.
Once completed the checklist should then tell you which loan and or plan type to use; if your employee does not know their loan and/or plan type, they can check here.
This will allow you to start taking the correct loan deductions immediately. Operating the incorrect Plan or Loan Type could result in your employee having deductions taken which aren’t due.
Thresholds and rates from 2020 – April 2021
The thresholds for Plan 1 and Plan 2 Student Loans are increasing from April 2021.
The thresholds for the current tax year 2020-2021 are:
- Plan 1 – £19,390
- Plan 2 – £26,575.
Student and Postgraduate Loans thresholds and rates from 6 April 2021
The Department for Education has confirmed that from 6 April 2021 the thresholds will increase to:
- Plan 1 – £19,895
- Plan 2 – £27,295.
From 6 April 2021 HMRC will be introducing a new plan type for Scottish Student Loans (SSL) known as Plan 4. The Plan 4 threshold will be £25,000.
Student Loan deductions will continue to be calculated at 9% on earnings above the Plan 1, Plan 2 or Plan 4 threshold.
The Postgraduate Loan threshold will remain at £21,000. Earnings above £21,000 will continue to be calculated at 6%.
It can be daunting and time consuming when it comes to calculating payroll. Recently we have had changes such as RTI, hours on payslips and of course furlough. Added to Statutory Sick, Maternity and Paternity pay it can be a mine field to get it right.
If you are struggling with your payroll function then please give us a call or get in touch with us here. We can provide a payroll solution suited to you and your business. Whether you have 1 or 100 employees we will be able to provide a bespoke service to cover all your requirements.