Student loan deductions are statutory deductions on those employees who are liable to make repayments on loans taken out during higher education. Employers are required to make this deduction if they receive a SL1 Start Notice from the HMRC or when a new employee gives them a P45 with a ‘Y’ in the ‘Continue Student Loans Deduction?’ box.

The amount of deduction depends on the current income threshold limit and the percentage rate of deduction set by the HMRC. Repayments are made on a non cumulative pay period by pay period basis and are deducted from the employee's net pay. They will recur as appropriate until a SL2 Stop Notice is issued to the employer by the HMRC.

Select the Pay Frequency of the employee from the PayRun drop down menu. Select the appropriate Pay Period to be processed. The default Processing Date will always be determined by the current calendar date. Click on the Enter link in the Deduction & Pension column for the employee concerned. In the Student Loan section, enter the loan reference or loan issuer. Enter the start date for the student load deduction. In the future if/when you receive a SL2 Stop Notice from the HMRC, enter the stop date for the deduction. The rate at which the student loan will be deducted from the employee's pay will be displayed in the Rate column. Click on the Save button to save the entered details.