New student loan limits starting on 6th April 2018
Student loans have been in the Press lately and look set to play a part in any upcoming election. The topic of interest rates charged by the student loan company and whether students are receiving value for money have been dominating the headlines recently. Having been introduced in 1998, fees have increased from £1,000 a year to an average of £9,000. At present students repay 9% a year of their salary in repaying their student loans once they cross the income earning threshold.
Considering the recent pressures on the workforce, the government has now reacted and increased the earnings threshold of which an employee needs to earn to trigger loan repayments.
As 20 years have passed since its inception, there is now a considerable section of the workforce within the UK who fall in line with regard to the student loan repayment regime. Most people now have a student loan deduction as part of their monthly/weekly salary deductions. It is important that the employers correctly account for the deductions for their workforce.
There are two types of student loan plans. Plan 1 and Plan 2. Plan 1 is for pre-2012 loans and Plan 2 is for post-2012 loans. For Plan 1 the threshold for loans will increase from £17,775 to £18,330. For Plan 2 the current threshold is £21,000, this will increase to £25,000 from April 2018.
Please take action and ensure your payroll department is aware of the changes and your payroll software has been updated for the new rates.
Blog written by: Ahmet HusseinTalk to Barnes Roffe today