CSLM20020 | SL repayments: underpayments and overpayments: employer over-deducts loan repayments

There may be occasions where due to an error the employer makes an excessive Student and or Postgraduate Loan deductions from a borrower’s pay, for example, if the Student or Postgraduate Loan Deduction Tables have been misunderstood.

Note: Deductions should always be made in accordance with the Student and Postgraduate Loan Deduction Tables. Employers cannot deduct more student loans than is required in order for the borrower to pay off the loan quicker. If the borrower wishes to make additional payments this should be arranged with the Student Loans Company. Such payments would, however, be in addition to, and not instead of, payments deducted by the employer from earnings.

If employer has received a stop notice from HMRC, the employer should not make any refund, the Student Loans Company will make any refund due direct to the employee.

Error discovered in year

If the error is discovered in year, or before the End of Year forms and final remittance have been sent to HMRC, and stop notice has not been received the employer should

• Repay the employee, showing the amount of the repayment as a minus on the employee’s payslip

And

• Make any necessary adjustment to the amounts paid to HMRC when the next Full Payment summary (FPS) is sent.

Error discovered after end of year

If the error is discovered after the End of Year forms have been submitted to HMRC, or after the borrower has left this employment. The employer does not need to take any further action to rectify the error. If asked the employee should contact the Student Loans Company

If Employer has not submitted the End of Year forms for that year, you can repay any over-deducted amounts to the employee and amend the payroll records to ensure the final FPS reflects the correct figures