Student Loan Deductions – Reducing student loan over-repaymentsWednesday, December 23rd, 2009
On 14 December 2009, the Student Loans Company (SLC) introduced a new initiative to limit the occurrences of over-repayments of loans through the payroll. The problem arises frequently where regular deductions are made throughout a tax year and it is only when the year-end P14 is submitted that it is discovered that more has been repaid than is owed.
In the final 23 months of repayment, PAYE student loan borrowers may, if they wish, choose to opt out of payroll deductions and arrange to make payments by Direct Debit to pay the remainder of the loan. SLC will try to contact borrowers at the appropriate time to offer the facility. Alternatively, borrowers may approach the SLC direct in order to make the arrangements. Either way, the employer is not involved in the process and must only stop making payroll deductions when a Stop Notice is received.
If a borrower defaults on the Direct Debit payments, SLC will instruct the employer to resume payroll deductions.
The instructions for the use of “box D” on the online version of form P46 was amended from 21 December 2009. Updated paper P46 forms, for those permitted to use them, will be available from July 2010.
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