{"id":5908,"date":"2024-08-20T08:19:00","date_gmt":"2024-08-20T08:19:00","guid":{"rendered":"https:\/\/www.bainesjewitt.co.uk\/blog\/?p=5908"},"modified":"2024-08-20T08:19:02","modified_gmt":"2024-08-20T08:19:02","slug":"hiring-graduates-heres-what-you-need-to-know-about-payroll-management","status":"publish","type":"post","link":"https:\/\/www.bainesjewitt.co.uk\/blog\/hiring-graduates-heres-what-you-need-to-know-about-payroll-management\/","title":{"rendered":"Hiring graduates? Here\u2019s what you need to know about payroll management"},"content":{"rendered":"<p>It is the time of year when the job market is populated with new graduates, fresh from receiving their university results, and a great time for your business to pick out a talented new hire.<\/p>\n<p><!--more--><\/p>\n<p>Hiring recent graduates is a great way to inject new ideas and energy into your team.<\/p>\n<p>However, managing payroll for graduates comes with specific responsibilities, especially when it comes to handling student and postgraduate loan repayments.<\/p>\n<p><strong>Student loan repayments<\/strong><\/p>\n<p>Graduates will be assigned to different payment plans depending on when they started their course. The criteria for these plans are below:<\/p>\n<ul>\n<li>If they started the course before 1 September 2012 \u2013 Plan 1<\/li>\n<li>If they started the course between 1 September 2012 and 31 July 2023 \u2013 Plan 2<\/li>\n<li>If they applied to Student Awards Agency Scotland \u2013 Plan 4<\/li>\n<li>If they started the course on or after 1 August 2023 \u2013 Plan 5<\/li>\n<\/ul>\n<p>Postgraduate loans are given to those who studied a postgraduate master\u2019s or doctoral course.<\/p>\n<p>The earnings thresholds for student loans are as follows:<\/p>\n<ul>\n<li>Plan 1: \u00a324,990 annually (\u00a32,082 monthly)<\/li>\n<li>Plan 2: \u00a327,295 annually (\u00a32,274monthly)<\/li>\n<li>Plan 4: \u00a331,395 annually (\u00a32,616 monthly)<\/li>\n<li>Plan 5: \u00a325,000 annually (\u00a32,083 monthly)<\/li>\n<li>Postgraduate loans: \u00a321,000 annually (\u00a31,750 monthly)<\/li>\n<\/ul>\n<p>Graduates will start repaying their student loans when their income exceeds the respective threshold for their loan plan.<\/p>\n<p>The repayment rate is nine per cent of the income above the threshold for Plan 1, 2, 4 or 5 loans, and six per cent for postgraduate loans.<\/p>\n<p>For example, a graduate earning \u00a335,000 under Plan 2 will repay \u00a375 per month, while someone earning \u00a350,000 will start with monthly repayments of \u00a3187.50.<\/p>\n<p><strong>Handling payroll for graduates with student loans<\/strong><\/p>\n<p>When you receive a start notice (SL1 or PGL1) from HM Revenue &amp; Customs (HMRC), you must check the loan or plan type and the start date on the notice.<\/p>\n<p>This ensures your payroll is set up correctly, so the employee does not overpay or underpay their loan.<\/p>\n<p>Make sure you use the correct plan type as indicated on the SL1 or PGL1 notice.<\/p>\n<p>If your employee is unsure about their plan type, they can verify it by logging into their student loan account online.<\/p>\n<p>If your employee\u2019s earnings exceed the repayment threshold for their loan plan, start deductions immediately.<\/p>\n<p>If deductions are not made and HMRC sends a reminder, act quickly to avoid further issues.<\/p>\n<p>Keep making deductions until you receive an SL2 or PGL2 stop notice from HMRC.<\/p>\n<p>This notice will indicate when to stop making deductions, and it\u2019s important to follow these instructions to the letter.<\/p>\n<p>If an employee claims they never had a student loan, you must still proceed with the deductions as per the start notice until HMRC instructs otherwise.<\/p>\n<p>If you engage employees through their own companies, remember that your business is not responsible for deducting student or postgraduate loan repayments.<\/p>\n<p>The employee will manage these obligations through their own tax return.<\/p>\n<p>In the unfortunate event of an employee&#8217;s death, do not make any deductions from payments made after their death, as these payments are exempt from student loan deductions.<\/p>\n<p><strong>Why accurate payroll management matters<\/strong><\/p>\n<p>Accurately managing payroll, especially when dealing with student loan repayments, is crucial for compliance and maintaining employee trust.<\/p>\n<p>Overpayments or underpayments can lead to complications and dissatisfaction among your team.<\/p>\n<p>HMRC has made it clear that payroll errors can trigger reminders, and failure to act on these can result in direct contact from HMRC.<\/p>\n<p><strong>If you\u2019d like support with setting up payroll for graduates with student loan obligations, we are here to help. Contact us today.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>It is the time of year when the job market is populated with new graduates, fresh from receiving their university results, and a great time for your business to pick out a talented new hire.<\/p>\n","protected":false},"author":2,"featured_media":5911,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,125,28,85],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5908"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=5908"}],"version-history":[{"count":1,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5908\/revisions"}],"predecessor-version":[{"id":5909,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5908\/revisions\/5909"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/5911"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=5908"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=5908"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=5908"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}