Student loan Refund

I have been requested by HMRC to stop taking student loan deduction from an employee, as is not liable for this and repay the employee all the student Loan deduction taken from 6th April 2022.

Can you please advise how can this be made?

Regards,

Andrada

Parents
  • 0

    As the payment is taken from Net pay, it is post Tax, post NI, post Pension contributions, I would create a new pay element "Student Loan refund" which is post Tax, post NI, not to be considered in any way for Pension - like an expenses reimbursement.  I would have thought that attachments of earnings have a higher priority and any student loan would come out of the net after these, so I would guess that the refund shouldn't be considered for these either (though I can't be too sure).

    I would post this refund pay element to the HMRC (tax) liability nominal (as a debit), effectively cancelling the previous liabilities (credits) taken in error.

    I hope that if you had paid HMRC that they will be giving you a refund of the total amount, possibly as a credit on your account meaning you can reduce a future payment.

    If refunded as a credit on your account, when you post the payroll to your accounts the Student Loan refund will reduce the tax liability of the payroll run, and when you pay HMRC, you will only need to pay the resulting difference (as HMRC should have also credited your account with them for the same amount).

    If they physically refund you the payments, I would refund it from the bank to the HMRC (tax) liability (appearing as a credit) and it would cancel the payroll refund posted there (as a debit); in this case you'll need to pay HMRC the full liability from the payroll run.

Reply
  • 0

    As the payment is taken from Net pay, it is post Tax, post NI, post Pension contributions, I would create a new pay element "Student Loan refund" which is post Tax, post NI, not to be considered in any way for Pension - like an expenses reimbursement.  I would have thought that attachments of earnings have a higher priority and any student loan would come out of the net after these, so I would guess that the refund shouldn't be considered for these either (though I can't be too sure).

    I would post this refund pay element to the HMRC (tax) liability nominal (as a debit), effectively cancelling the previous liabilities (credits) taken in error.

    I hope that if you had paid HMRC that they will be giving you a refund of the total amount, possibly as a credit on your account meaning you can reduce a future payment.

    If refunded as a credit on your account, when you post the payroll to your accounts the Student Loan refund will reduce the tax liability of the payroll run, and when you pay HMRC, you will only need to pay the resulting difference (as HMRC should have also credited your account with them for the same amount).

    If they physically refund you the payments, I would refund it from the bank to the HMRC (tax) liability (appearing as a credit) and it would cancel the payroll refund posted there (as a debit); in this case you'll need to pay HMRC the full liability from the payroll run.

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