Student loan repayments are changing in 2019. The current repayment threshold is £18,330, so anyone with a salary over the threshold must repay 9% of earnings. The new 2019 threshold will increase to £18,935 for Plan 1 and £25,725 for Plan 2. So what do these new thresholds mean for employers?
If you have employees with student loans, HMRC will instruct you how to calculate and deduct the correct amounts from payroll. Payslips must also show the deductions so they employee can see how much is begin repaid each pay period. As an employer, you will have to report to HMRC how much you have deducted, and ensure employees have a compliant method of accessing their payslips and P60s to confirm this information.
If your payroll process uses manual entry, email, and spreadsheets, this can lead to inaccurate withholding and deductions. If you have errors with over deduction or under-deduction, it gets more complicated with HMRC to correct mistakes. Ensuring accuracy and compliance is important when it comes to student loans and payroll.
Using technology to simplify your payroll process ensures accuracy and compliance, while reducing the resources needed to manage payroll each month. Cloud-based systems allow you to access payroll from any mobile device and offer employee self-service portals so you don’t spend time on administrative changes your employees can make themselves. There are many payroll-related changes coming in 2019 beyond student loans, so now is the time to start thinking about automating your payroll. To learn more about simplifying your payroll, click here.
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