CSLM20025 | SL repayments: underpayments and overpayments: employer under-deducts loan repayments

This situation could arise if the employer fails to operate a Start Notice or misunderstands the Student and Postgraduate Loan Deduction Tables.

Error discovered in year

If the under-deduction is discovered in year, or before the End of Year forms and final Full Payment submission (FPS) has been sent to HMRC, the employer should

• Consider recovering, within limits, the under-deduction from the borrower during subsequent pay periods. See the notes below

• Remit to HMRC the amounts actually deducted in the normal way

Notes:

1. The Employer should not recover an under deduction of student and or postgraduate loan repayments above the amount for that period. The additional amount should be less than, or equal to, the amount that is due to be deducted in that period.

Example: If the employer has under-deducted Student Loan repayments in the sum of £18 then, the following scenario could arise

Error discovered after the end of the year

If the error is discovered after the End of Year forms have been submitted to HMRC, the employer should

• Take no action to collect the under-deduction from the borrower

Notes:

• 1) The borrower's account with the Student Loans Company will be credited with the amounts deducted. The borrower will continmue to have student and or postgraduate loan deductions taken until an employer receives a stop notification from HMRC

• 2) If the borrower has an SA record then any over or under-deduction will normally be taken into account as part of the self assessment and any resulting underpayment included in the balancing payment.