PAYROLL - 31.05.2022

Student loans and off-payroll warning

HMRC update. Since April 2021 HMRC has been closely monitoring reports businesses have made under the off-payroll rules. Recently this has shown a significant number of errors involving workers who are repaying student or postgraduate loans. Specifically, using payroll software for an off-payroll worker, businesses and payroll bureaus are:

• selecting the student or postgraduate loan deductions indicator where the worker has such a loan; or
• selecting the off-payroll indicator for non-off payroll workers, i.e. normal employees, who have student or postgraduate loans.

In the first instance this results in excessive deductions from the payments to the worker, and in the second not enough deductions.

Tip. If you have erroneously selected the student/postgraduate loan indicator for an off-payroll payment, send an employer payment summary correcting the error and refund resulting in overpayments to the work. If you have incorrectly selected the off-payroll worker indicator, make sure it is removed for your next payroll.