To Gather the right information about your new employee if they do not have a recent P45.On 6 March, the correct 2019 starter checklist, was published on the starter checklist page of gov.uk. after months of problems and incorrect forms being published by Government Digital Services.
Result
After nearly a month, the right documentation was finally available to agents and employers, HERE. How do you know if what you have printed off is the right version? If should be dated 2/19 and have vertical columns on the reverse of the form – the left-hand side relating to student loans and the right-hand side relating to postgraduate loans.
What you need to know
The new 2019 starter checklist should not be completed by:
- An undergraduate or postgraduate who has completed their studies/left a course but are starting a job before the next 6th April after they left their studies. Deductions never begin until the start of the first tax year after that event.
- An undergraduate who is working but still studying, including on a placement year in industry, unless unusually they have already received one undergraduate loan that is in repayment and are now taking a second degree. If that is the case, they will complete the form in respect of the first loan that is already in repayment.
- A postgraduate who is working whilst studying will be due to repay their undergraduate loan from 6th April after they finished their undergraduate studies.
- Anyone with a loan from 1998 or earlier.
- Anyone who is paying the student loan company by direct debit as they have been living overseas or are within two years of paying off their loan.
Conversely, the new starter checklist must be completed as a plan 2 undergraduate loan for:
- Those with an Advanced Learner loan, even though this will be a non-uni qualification loan taken by someone who is working.
- Anyone with a postgraduate healthcare loan such as taken out to study to be a midwife or dental nurse.
Anyone who has both a plan 1 and plan 2 loan and answers question 12 to that effect should be set up on Plan 1 repayments and the Student Loan Company will split the deductions between the two loan plans.
What payslips must show
On payslips issued from April 2019, there will potentially be two deductions: one for plan 1 or 2 loans and another deduction for the PGL. As the pay threshold for paying the PGL is £21,000 and the deduction is set at 6%, it may be the only deduction if the employee also has a plan 2 loan and has earnings below the £25,725 (the plan 2 threshold for 2019/20). If both deductions are due from the employee, he or she will suffer a total deduction of 15% for student loan repayments, on top of tax and NI due and increased pension contributions.
To accommodate PGL deductions a new format of the P60 will be in use for 2019/20.
Inadequate P45
It is self-evident that the P45 form used in isolation is insufficient to determine the correct student loan deductions as it hasn’t been updated. It simply indicates there was a loan in repayment at the last employer, but not which sort of student loan.
Since 2012 when plan 2 loans were introduced, employers have defaulted to plan 1 in the absence of further detail on the starter checklist. This approach is no longer appropriate, and all new starters must complete the starter checklist – assuming the employer has managed to track it down!
For assistance contact the Avanti Payroll Bureau enquiries@avantigrpoup.uk.com