The world of payroll sees many changes come into play from 6th April 2016, one being the new rules on student loan orders.
The way Student loans will be operated from April works on a threshold system which are deductions on the student loan orders state to the payroll department which ‘Plan’ type should be operated.
There are two types that can be applied Plan 1 and Plan 2.
Plan 1 deduction is taken at 9% / threshold of £17,495
Plan 2 deduction is taken at 9% / threshold of £21,000
What will you now pay?
You pay back 9% of your income over the minimum amount of:
£17,335 for Plan 1
£21,000 for Plan 2
Interest starts being added to your student loan from when you receive the first payment. How much you pay back depends on which plan you’re on.
Plan 1
| Your income per year | Monthly repayments |
|---|---|
| £17,335 and under | £0 |
| £20,000 | £23 |
| £25,000 | £61 |
| £30,000 | £98 |
| £50,000 | £248 |
Interest on Plan 1
You currently pay interest of 0.9% on Plan 1.
Plan 2
| Your income per year | Monthly repayments |
|---|---|
| £21,000 and under | £0 |
| £25,000 | £30 |
| £30,000 | £67 |
| £50,000 | £217 |
Interest on Plan 2
While you’re studying, interest will be inflation plus 3%.
| Income | Interest rate |
|---|---|
| £21,000 or less | Inflation |
| £21,000 to £41,000 | Inflation plus up to 3% |
| Over £41,000 | Inflation plus 3% |
