SolvedCSLM16030 | SL & PGL repayments: calculation of loan repayments: how are repayments calculated?
From HM Revenue & Customs · Collection of Student Loans Manual
Simple calculation
The simple calculation of Student Loan and or Postgraduate Loan repayments is
Borrower's income
Less threshold for the relevant loan and or Plan type
Balance (income less threshold) X rate = Student Loans and or Postgraduate Loan repayments for the year
However, the following points should be noted
Note: Student loan Plan 1, Plan 2, Plan 4 and Plan 5 have a different threshold and same rate
Postgraduate loan have a different threshold and rate
Student Loan plan 1 or 2 or 4 or 5 and Postgraduate loan can be repaid at the same time.
Income
Threshold
Where the repayments are calculated on total income for the year, for example where the borrower is self employed, the annual threshold will be used.
However, where a borrower is liable to PAYE then each pay period has to be looked at in isolation by the employer and the threshold is the pro rata amount of the annual threshold that relates to that pay period. Payroll software will take care of this calculation for the employer.
For weekly or monthly paid borrowers the appropriate pro rata thresholds and rates can be found in the SL3: Student Loan and Postgrauate Loan deduction tables. However payroll software will automatically use the correct amounts.
Although the employer has deducted repayments correctly per period, the borrower's income for the year may not exceed the annual threshold. In these circumstances the borrower may claim repayment from the Student Loans Company.