Student loans and postgraduate loans 2019/20 threshold and rates

As we are approaching month 3 of the 2019/20 tax year a small reminder of the thresholds and rates for student loans and the recently introduced postgraduate loans may be of some benefit.

Student Loan Threshold and rates

Student Loan Plan 1 threshold is £18,935

Student Loan Plan 2 threshold is £25,725

Both plan 1 and plan 2 repayments are calculated at 9% of the income above the threshold. If an employee earns £1750 a month and is on Plan 1 then the repayment amount will be £15.00 as the amount is always rounded down to the nearest pound.

Postgraduate Loan Threshold and rates

Postgraduate Loan threshold is £21,000

Postgraduate Loan repayments are calculated at 6% of the income above the threshold. If an employee earns £2000 a month then this is £250 over the monthly threshold, therefore, the repayment amount will be £15.

An employee may have to repay a Student Loan Plan 1 or Plan 2 at the same time as a Postgraduate Loan. If this is the case, then they will pay 15% of the amount they earn over the thresholds.

HMRC will send either a paper notice or an electronic notice to inform employers that they need to begin to take deductions. The amounts taken from the employee will be submitted to HMRC via the Full Payment Submission every pay period.

The payments need to be made to HMRC by the 19th of the following month if paying by cheque, or the 22nd of the following month if paying electronically, along with any tax and national insurance liabilities that may be due. For example, the April pay run deductions need to be paid over to HMRC by the19th or the 22nd of May.

If you have any questions regarding the threshold and rates for the 2019/2020 tax year then please contact Emma Mahoney, or alternatively phone 01772 840414 to speak to our payroll team.