HMRC starter checklist completion
The starter checklist is required for completion by all employees whether they present a P45 or not.
If the P45 indicates a Student Loan and that their course finished before the last 6th April, then the employee must complete the Student Loan questions to determine the correct Plan Type 1, Plan Type 2, Plan Type 4 or Plan Type 5 and whether there is a postgraduate loan deduction to take place.
From April 2026 the default plan type will change to Plan Type 5 (previously Plan Type 1).
Employers are permitted to create or use their own version of the form or incorporate the starter checklist questions into employer created induction/new starter documents.
The example or template starter checklist can be downloaded at:
It is possible to print blank copies of the forms or employers may email the form for completion by their employees as necessary.
New Starter Checklist and Student Loans
The student loan questions can be problematical for employees. From September 2022 the questions have been further adjusted in a hope to make them a little clearer. Employees that have graduated in the current year may not understand that they did not graduate and leave their course before 6th April.
Question 11 and 12
A Student or Postgraduate Loan is only to be applied if box 11 is ticked against No and box 12 is ticked against box No.
If YES is ticked against question 11 or Yes against question 12. then there are no student loan deductions to be deducted even if the employee has marked items against question 13.
Question 13
An employee may indicate multiple student loan types that apply to them.
As an employer you must only apply one of the Plan types for 1, 2, 4 or 5.
An employee can also have a Postgraduate loan operating as well.
Prior to 6th April 2026 where multiple Student loan plans are in place, from 6th April 2026 the priority is firstly given to:
- Plan 1, then
- Plan 2, then
- Plan 4
- Plan 5 is not yet live for deductions
From 6th April 2026 the new starter checklist form will be changed to reflect the new Plan type 5 student loans which commence deductions from that point in time.
Where multiple Student loan plans are in place, from 6th April 2026 the priority is firstly given to:
- Plan 5, then
- Plan 1, then
- Plan 2, then
- Plan 4
Only one of plan 1, 2, 4 or 5 can be applied at any time. Any SL2 notice provided with a different plan number will stop the current plan and start the new plan type.
Unlike undergraduate loans where only 1 can be applied at any one time, postgraduate loan recovery can additionally run alongside.
COLLECTION OF STUDENT AND POSTGRADUATE LOANS
Employers are responsible for collecting employee payments on student and postgraduate loans on behalf of HM Revenue and Customs (HMRC). The employer will collect these repayments by making deductions from pay. Collections will be automatic through the payroll system using HMRC defined rules.
- An employer will be notified that they have to deduct student or postgraduate loan repayments for an employee either by receiving a Student or Postgraduate Loan Start notice (SL1 / PGL1) or a P45 with a ‘Y’ in the Continue Student Loan box, alongside an employee completed New Starter Declaration indicating which student loan plans they have and any postgraduate loan to be applied. The employer is not be notified of the total amount to be repaid.
- The deduction in each pay period will be calculated at a set rate (9% for student and 6% for postgraduate loans) of Class 1 NIable pay above an annually announced threshold and its weekly/monthly equivalent.
- The employer will be notified when the student or postgraduate loan repayments are to cease by notice SL2 or PGL2 Stop notice.
- If an employee leaves while repaying a Student or Postgraduate loan, the P45 for the employee will show a ‘Y’ in the specified box.
- SDWorx-Pay treats student loans in a similar way to AEOs and EAs. Student loans are recovered according to government regulation and given a priority in the case of an employee having more than one AEO/EA. For more information on this, see AEO/EAs.
| Name | Engine code |
| Start student/postgraduate loan deduction | C001 |
| Stop/restart student/postgraduate loan deduction | C003 |
| Deduction increase this payrun only | C021 |
| Deduction decrease this payrun only | C022 |
| Deduction replacement this payrun only | C025 |
| Student/Postgraduate loan paid to-date in tax year | C068 |
| Amount paid to-date | C069 |
With these payroll items you can:
- Increase, decrease or replace the deduction amount for each student/postgraduate loan, for this payrun only, using Deduction increase/C021, Deduction decrease/C022 or Deduction replacement/C025.
- Replace the total amount paid to-date for each student/postgraduate loan using Amount paid todate in tax year/C068, Amount paid to-date/C069.
PROTECTED EARNINGS AND ARREARS
Student/postgraduate loans are deducted only if the employee’s net pay is sufficient. If an employee has an existing priority AEO with protected earnings, then this value will also apply to student loans.
FREQUENCY AND PAY PERIODS
The number of pay periods used in the calculation of Collection of Student Loans (CSLs) (which are statutory deductions) is defined in the following ways:
- At company set-up time, in accordance with the processing schedule’s standard calendar.
- At employee level you can override the company-level number of periods using the employee-level Override number of pay periods for statutory deductions and advance tax period/E810 or Override number of pay periods for statutory deductions and not advance tax period/E811.
SIGNED INPUT
You can enter positive or negative cash amounts against some of the student/postgraduate loan payroll items, by preceding the amount with a positive or negative sign. If you enter no sign, a positive amount is assumed. The exceptions are:
- Start student loan deduction/C001
Note that the effect of entering a negative amount against:
- Deduction increase/C021
- Deduction decrease/C022
and other payroll items that increase and decrease amounts for this pay period only is to reverse the effect; that is, an increase becomes a decrease, and a decrease becomes an increase.
Note:
- The following reports and documents can be updated as a result of processing CSLs:
- Attachment (Arrestment) of Earnings Statement Report
- Input Error Report
- Financial Summaries
- Reconciliation Report
- EOY Exception Report
- EOY Reconciliation Report
TYPES STUDENT/POSTGRADTE LOANS
There are 3 difference types of Student Loan deductions that can be applied. Only one Student Loan Type is operates at any one time whether Plan 1, 2 or 4. There is also a Postgraduate loan that can be operated concurrently or on its own:
| Student Loan | Type |
| Plan Type 1 (England and Wales and pre April 2021 for Scotland) | L1 |
| Plan Type 2 (England and Wales only) | L2 |
| Plan Type 4 (Scotland only since April 2021) | L4 |
| Plan Type 5 (England since April 2026) | L5 |
| Postgraduate Loan (England and Wales only) – sometimes referred to as Plan Type 3 | LP |
If the P45 indicates that a student loan deduction is to continue and no specific student loan is specified, then the employer is instructed to apply Student Loan type 1 (identified as L1). From 6th April 2026 the default plan will be Student Loan type 5.
When a change of student loan plan is notified by HMRC, they will not issue a SL2 stop notice for the former student loan, only an SL1 start notice for the new loan plan type.
STUDENT/POSTGRADUATE LOANS DATA CODES
| START STUDENT/POSTGRADUATE LOAN DEDUCTION | C001 |
Use C001 to start a student/postgraduate loan deduction.
Format 1
Ln/ddmmyyyy where n is the student loan type and ddmmyyyy is the start date for the student loan deduction. Use this format when in receipt of student loan notice SL1 or postgraduate loan notice PGL2.
Example
Start a Scottish student loan plan type 4 deduction commencing 01/05/2026.
C001 L4/01052026
SDWorx-Pay will start student loan deductions on the first pay date after the start date
Format 2
L2/y where y means start the Student Loan Plan 2 deduction immediately. Use this format when in receipt of P45 with Student Loan marked Y with a new starter declaration indicating Loan Plan 2.
Example
Start student loan deduction immediately.
C001 L2/Y
Payroll Active will start student loan deductions on the first pay date after the start date
Format 3
LP/START where START means start the postgraduate loan deduction immediately.
Example
Start postgraduate loan deduction immediately.
C001 LP/START
Note:
- Use Format 1 when in receipt of a Student/Postgraduate Loan Form (SL1 or PGL1).
- Use Format 2 when in receipt of P45 with Student Loan marked Y and have an associated Starter Checklist.
.
| STOP/RESTART STUDENT/POSTGRADUATE LOAN DEDUCTION | C003 |
Please note that the HMRC issued Stop notice SL2 specifies no plan type as it stops any student loan plan type whether entered as L1, L2 or L4.
Use C003 to stop, restart and delete student loan deductions.
Format 1
Ln/STOP where STOP will stop student loan deductions immediately.
Example
Stop the student loan immediately.
C003 L1/STOP
Format 2
Ln/ddmmyyyy where n is the plan type and ddmmyyyy will stop the student loan deduction at a specified date.
Example
Issue date on Student Loan form (SL2) is 01/05/2022. SL2 is issued by HMRC.
Format 3
Ln/RESTART where RESTART will restart the student/postgraduate loan deduction effective immediately. This may be due to the student/postgraduate loan deduction being stopped in error.
Example
Restart the postgraduate loan deduction.
C003 LP/RESTART
Format 4
Ln/DELETE where DELETE will delete a student/postgraduate loan deduction set up in error.
Example
Delete a Scottish plan 4 student loan deduction. C003 L4/DELETE
Note:
- If you delete a student loan deduction created in error, you will need to zeroise C068 Student loan paid-to date in tax year.
| DEDUCTION INCREASE | C021 |
| DEDUCTION DECREASE | C022 |
Use C021 or C022 to increase or decrease the deduction, for this payrun only
Format 2
Ln/ppppppppppp
Where
- L is the student loan identifier.
- n identified as either 1 for Plan type 1, 2 for Plan type 2, 4 for Scottish Plan type 4, 5 for Plan type 5 and P for postgraduate
- ppppppppppp is the increase or decrease in the deduction, in pence, up to 11 numeric characters.
Example
The deduction for plan 1 student loan is increased by £3.00 C021 L1/300
Note:
- Use Deduction replacement/C025 to replace a deduction amount for this payrun only.
- You can adjust the deduction for a student loan using C021 or C022, but you cannot replace the deduction permanently using Deduction amount/C020.
- You can enter successive amounts against each of C021 and C022 in the same pay period. At the time of the payrun, Payroll Active totals the amounts against each, and increases or decreases the deduction accordingly
| DEDUCTION REPLACEMENT | C025 |
Use C025 to replace the current deduction amount for this payrun only.
Format
Ln/ppppppppppp
Where
- L is the student loan identifier.
- n identified as either 1 for Plan type 1, 2 for Plan type 2, 4 for Scottish Plan type 4,5 for Plan type 5 and P for postgraduate
- ppppppppppp is the increase or decrease in the deduction, in pence, up to 11 numeric characters.
Example
Replace the this time plan 2 student loan deduction amount with £30.00 C025 L2/3000
Note:
- Use Deduction increase/C021 or Deduction decrease/C022 to adjust this new deduction amount for this payrun only.
| STUDENT LOAN PAID TO-DATE IN TAX YEAR | C068 |
Use C068 to replace the student loan amount paid to-date in the current tax year (which
Payroll Active automatically calculates and holds against C068)
Format
Ln/ppppppppppp
Example
Replace postgraduate loan amount paid to-date in the current tax year with £300.00.
C068 LP/30000
Note:
| AMOUNT PAID TO-DATE | C069 |
- Payroll Active will zeroise the total amount paid to-date (C068) at the end of each tax year .
Use C069 to replace the current student loan amount paid to-date (which Payroll Active automatically calculates and holds against C069).
Format
Ln/ppppppppppp
Where
- L is the student loan identifier.
- n identified as either 1 for Plan type 1, 2 for Plan type 2, 4 for Scottish Plan type 4, 5 for plan type 5 and P for postgraduate
- ppppppppppp is the increase or decrease in the deduction, in pence, up to 11 numeric characters.
Example
The current amount paid to-date for plan 1 L1 is replaced with £1308.00:
C069 L1/130800
Last updated 26/9/2023 (PSP)