Student loan deductions for 2022/23
We now have the final information about student loan deductions for 2022/23. What are the key takeaways from the announcement?
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New HMRC guidance on winter fuel payments
HMRC has released new guidance on the recovery of winter fuel payments. What do you need to know?
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Festive tax breaks for remote workers
You’re familiar with the tax break for Christmas parties but you now have a few remote workers, and the company will need to reimburse their travel and accommodation costs if they attend an event. Which costs count towards the tax-free limit and how can you manage any overspend?
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New process for some exports starting in Northern Ireland
Starting next month, businesses that import goods via Northern Ireland will need to change their processes. What do you need to know?
Background
Since April 2021 there have been three undergraduate loan plans to handle through the payroll, plus postgraduate loans. Plan 4 loans came about because the Scottish government decided to increase the threshold for repayers who had received a loan from Student Awards Agency Scotland. This necessitated breaking Scottish repayers out of the Plan 1 cohort and introducing a separate loan plan. The Plan 4 threshold was confirmed in November 2021 and was uprated to £25,375 with deductions over the threshold remaining at 9%. Plan 1 repayers are English, Welsh, and Northern Irish students who took out a loan pre-September 2012. They have seen their threshold uprated to £20,195, again with a 9% deduction rate.
Plan 2 and postgrads
No announcements were made on Plan 2 and postgraduate loan thresholds because these were subject to proposals from the review of higher education funding in England that Philip Augar undertook for the government in 2019. There was mounting concern from payroll software developers that this information would not be made public in time for inclusion in software for April 2022 as this is released to clients at the end of January each year. After much lobbying an announcement was made on 28 January 2022 that the thresholds for Plan 2 and postgraduate loans would not be uprated. This means they will remain at £27,295 for Plan 2 and £21,000 for postgraduate loans. Deduction rates will remain at 9% and 6% respectively. This is an increase for students repaying against these plans, however given that the Augar review proposed a significant reduction in the thresholds and a longer write-off period, it could have been much worse news for repayers.
Advanced learner loans (loans for those studying whilst working) are treated as Plan 2 loans.
Multiple plans
As only one undergraduate loan can be deducted through the payroll at any one time, if a new starter indicates that they have more than one plan, i.e. a combination of plans 1, 2 and 4, which is increasingly likely, you are required to default the plan that is set up in the payroll to the one with the lowest threshold for the tax year concerned. This means that the following table should be applied for 2022/23.
|
Plan selected |
Plan type |
|
P45 ticked but no starter checklist supplied |
1 |
|
Plans 1 and 2 selected |
1 |
|
Plans 1, 2 and 4 selected |
1 |
|
Plans 2 and 4 selected |
4 |
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