Add student loans

When you add a new hire, either their P45 or New Starter Checklist will specify if the employee has a student loan to repay in the payroll. Add student loan details to an employee’s profile so it’s properly processed in the payroll.

Before you begin

P45s don’t specify which loan type to apply, and if an employee doesn’t know their plan type they may not declare this in their New Starter Checklist.

Ask the employee first if they know their student loan plan type. If they don’t know, they can follow HMRC’s guidance on Which repayment plan you’re on. Otherwise, default to Plan 1. To learn more, see HMRC’s guidance on Collection of student loans from 6 April 2024.

If you have Connected with HMRC, any new loans applied to existing employees are automatically updated once the Start Notice (SL1) is received from HMRC. Similarly, any stop notices applied to existing employees are automatically updated once the Stop Notice (SL2) is received from HMRC.

UK Payroll must implement HMRC-issued start (SL1) or stop notices (SL2). A student loan can only be stopped when an SL2 is received. Any overpayments are refunded to the employee by the Student Loans Company directly.

For further guidance, see HMRC’s Student loan and postgraduate loan repayment guidance for employers.

How to add a student loan to an employee’s profile

1. From the left side bar, navigate to Employees and select the relevant employee.
2. Select the Pay items tab.
3. Click Add pay item > Student loans.
4. Toggle on the correct Plan.
5. Click Save & close.

How to bulk update student loans from a file

If you haven’t set up automatic HMRC updates and need to update multiple student loans, you can import them using a CSV, TSV, or TXT file.

Note: Employee ID is a mandatory column for manual entry and file upload.

1. From the left side bar, navigate to Employees.
2. Click Import / Export > Import student loans in the top right corner.
3. Once you’ve clicked Upload data from a file, use the file navigator to select your work hours data file.
4. Confirm if your file contains a header row or no header row by selecting Yes (if your file contains headers), Select another row (if your file contains headers but in a different row to the row indicated with the arrow), or No header row (if your file doesn’t contain headers).
5. Once headers are confirmed, the column headings will begin matching automatically, which you can confirm by clicking Confirm mapping. If you have any columns that are unable to be matched, a Lookup matching fields dropdown will appear.
6. Click Review to check that the confirmed mapping for the file is correct. Then, click Continue once you’re satisfied with the data review.
7. If you are ready to submit, click Yes.

How to bulk update student loans manually

1. Fill in the student loan data under each column.
2. Once you’re done, click Continue.
3. If you are ready to submit, click Yes.

FAQs

What if I apply the wrong plan type?
If the wrong student loan plan type (Plan 1, Plan 2, or Plan 4) is selected, HMRC will issue an SL1 to notify you of the correct plan type.

What if I don’t apply a student loan when I should have?
HMRC will issue an SL1 in the next available payroll. Student loan deductions shouldn’t be backdated in payroll. However, the employee can make an additional payment directly if they wish. To learn more, see HMRC’s guidance on Repaying your student loan.

What if I accidentally apply a student loan when I shouldn’t have?
You can make a net refund to the employee. Then, contact the Student Loans Company to inform them, and contact support to adjust the Student Loan Year to Dates in the payroll.

I’ve added a student loan to an employee; why are there no deductions?
Student loans are only deducted if the employee has earnings over the threshold specific to their plan type.

What amount is the student loan calculated on?
Student and post-graduate loans are calculated on any pay subject to National Insurance. Each plan type has its own threshold and percentage rate. For more information on the current thresholds, see HMRC’s guidance on How much you repay.

What columns do I need if I’m bulk uploading from a pre-populated file?
The headings are listed in the manual data entry section: Employee ID, Student Loan Repayment - Plan 1, Student Loan Repayment - Plan 2, Student Loan Repayment - Plan 4, Postgraduate Loan. 

Tip: If you choose to use your own headings, UK Payroll will automatically try to match your headings, so try to choose similar or easily identifiable headings.

If I’m bulk uploading student loans, how should dates, units, and currency be formatted?
For columns that require specific formatting, refer to the manual data entry section. Hover over (i), the information icon in the column headings, to see a list of accepted values.

For columns that have multiple options, select the dropdown within a column’s cell to see a list of accepted values.