Payroll UK - Support for Plan 1 and Plan 2 student loans concurrently
Payroll UK Student Loans
Some employees can have Plan 1 and 2 at the same time. At present Xero payroll can only deal with 1 plan. The option should exist for an employee to select more than 1 Plan and the correct deductions be made.
This is how repayments are allocated between Plan 1 and Plan 2 loans
For the 2023/24 tax year the repayment thresholds are as follows:
• Plan 1 loans: £22,015
• Plan 2 loans: £27,295
If you earn below £22,015 you will make no loan repayments.
If you earn between £22,015 and £27,295 you will make Plan 1 loan repayments only.
If you earn over £27,295 you will make repayments which will be spread across both your Plan 1 and Plan 2 loans. This means that repayments calculated on income between £22,015 and £27,295 will be allocated against your Plan 1 loan and repayments calculated on your income above £27,295 will be allocated against your Plan 2 loan.
It's important that Xero Payroll can deal with this scenario.
Fiona Beech
shared this idea
Hi there, we appreciate you raised this a little while ago. This isn't something we have plans for in the near term.
HMRC's official guidance is that, when the employee is on more than one plan, process deductions for the plan with the lowest recovery threshold.
We're not getting a lot of support from other members we’ll soon remove this from Product ideas. If it’s still highly valuable to you, welcome to start it again and see if it gets renewed interest.
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Karl Trotter
commented
Hi
You need to enable including 2 student loans on the tax return. I have clients with both plan 1 and plan 2 loans and I am unable to include both which means the return is incorrect -
Vilija Blazeviciute
commented
We have an employee that is paying into 3 plans all together!!!