Statutory Student Loans for UK Employees

Student loan repayments for UK employees are treated as statutory deductions. The amount that Dayforce is allowed to deduct from each pay is defined by the employee's repayment plan type. Plan type defines the income threshold that the application uses 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. The application 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, or 4.
5. Select the employee's legal entity.
6. Click Save. The application calculates a student loan deduction for each payment made to the employee in regular or off-cycle pay runs.

Notes:

• The application calculates a student loan deduction for each payment made to an employee, in each regular or off-cycle pay run.
• If the employee has earnings beyond the threshold but does not have sufficient earnings on a payment to cover the deduction, the application does not allow a partial deduction. Moreover, if the employee misses a deduction, the application does not generate an arrears balance in their HR record in Dayforce.
• Dayforce respects the requirements for collecting student loans when employees have certain arrestments in place.
• Student loan deductions are automatic and take place separately from an employee's payroll elections. You do not need to add a deduction to the Payroll > Payroll Elections screen in the employee's record in People as you would with other types of deductions, such as, benefits, pension, fees. Moreover, the application does not automatically add a deduction record for student loans to this screen.
• If an employee is terminated because they have died, and the date they died is entered in the Date of Death field in the Employment > Employment Settings screen of People, then the application automatically suppresses the student loan deduction from the employee's final pay.

Effective Dates for Tax Info Records

Dayforce calculates payroll based on the current tax record that you add to the UK Tax Info section. For example, if an employee has a tax status record with student loans enabled, and the end date of the record falls two days before the pay date of the current pay run, Dayforce ignores this tax status when calculating the employee's taxes. This behaviour is because, for the remainder of the pay run (in this case only two days), the employee does not have a tax status with student loans enabled.