Statutory Student Loans for UK Employees

Student loan repayments for UK employees are treated as statutory deductions. The employee's repayment plan type determines the amount deducted from each pay, and the income threshold used to calculate the student loan deduction. An employee's plan type depends on factors such as when they applied for loans and where they lived when they applied. For more information about plan types and thresholds, see gov.uk.

Enable Student Loan Deductions

To enable student loan deductions for an employee:

1. Go to People, open the employee profile, and click Payroll > Tax Definitions.
2. In the UK Student Loan section, click Add.
3. Enter the loan's effective dates. Dayforce calculates and applies the deduction until the end date is reached or the record is deleted.
4. In the Student Loan Plan Type field, select plan type 1, 2, 4, or 5.
5. Select the employee's legal entity.
6. Click Save. Dayforce calculates a student loan deduction for each payment made to the employee in regular or off-cycle pay runs.

General information about statutory student loans

Item	Explanation
When is a student loan payable?	Student loan repayments are determined by HMRC.
Student loans compared to postgraduate loans	Employees might be liable to repay statutory student and postgraduate loans concurrently, because they’re separate loan products. This change means that, where applicable, Dayforce can deduct both student and postgraduate loans from the same employee.
Calculation	The HMRC rates and thresholds that are built into Dayforce determine the amount deducted from each pay.
System deduction code	When you calculate payroll for the employee, Dayforce generates the deduction using the system Postgraduate Loan deduction code, which shows in the Deductions section of the employee payslip. In the Employee tab of Payroll > Pay Run Management > Preview, the Student Loan code shows under the Statutory Deductions heading. Student loan deductions are separate from an employee's payroll elections. You don’t need to add a deduction to the Payroll > Payroll Elections screen in People as you do with other types of deductions, such as benefits, pension, fees.
PAYE Submissions	Student loans are calculated and sent in the employer’s regular payments to PAYE. In Payroll > Post Commit Management > Tax Month Management, in the slide-out panel for the selected legal entity, the Tax Month Reconciliation tab includes the Student Loan line below the FPS Summary heading.
Terminations	When a date is entered in the Date of Death field in the Employment > Employment Settings screen of People, Dayforce automatically suppresses the student loan deduction from the employee's final pay.