Student loans for 2021-22

Newsletter issue - May 2021

Starting from 6 April 2021, there is a new type of undergraduate student loan that employers need to be aware of when operating payroll - the Plan 4 loan (SLP4). The new plan type has been necessary due to the Scottish government amending certain details regarding repayment, including the increase of the earnings threshold. SLP4 will apply to all new and existing Scottish borrowers. This means that Scottish borrowers that were in repayment before 6 April 2021 using the Plan 1 (SLP1) arrangements will need to be moved across to SLP4.

The new plan is applicable to any individual that received a loan from the Student Award Agency for Scotland. Whether they live in Scotland or not is irrelevant.

The Student Loans Company will inform HMRC about individuals that need to be moved from SLP1 to SLP4, and HMRC will contact employers. However, it is also possible for the employee to prompt the employer to change the plan type being used for repayment. This is important as the repayment thresholds are different across the different loan types. For 2021-22, the appropriate thresholds and repayment rates are as follows:

Plan type

Plan 1

Plan 2

Plan 4

Postgraduate

Earnings threshold

£19,895

£27,295

£25,000

£21,000

Rate of deduction applied to excess

9%

9%

9%

6%

An employer should not operate student loan deductions for off payroll workers, even if the status determination is that they are a deemed employee. Instead, the worker will make good the appropriate deductions via their self-assessment tax return.

The earnings that are subject to deductions is the NIable pay. This can be different from the taxable pay, for example where there is an optional remuneration arrangement in place. Additional earnings from commission, overtime, or bonuses increase the deductions accordingly.

What our clients say about us...

  • "Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."

    ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT

  • "I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."

    Neil Price - Managing Director at Work Relief Charity Recruitment

  • "Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"

    Lee Westrap MBCS - Director - Bulldog IT Services

Request a Callback
Please complete our form
to request a callback
Get a Fixed Quote

Competitive fixed quotes
for agreed services

Find out how to Make more, Keep more and Work less

Increase your profit and
reduce tax liabilities

Your Business Size?

Expert advice for your
business size

 

Marker

Booth & Co  |   The Hermitage  |   15a Shenfield Road  |   Brentwood  |   Essex  |   CM15 8AG        Telephone: 01277 224666    |   Email: info@boothandco.co.uk