Did you know anything was changing regarding new employees from 6 April 2019? I ask this because the Government Digital Service (GDS) have managed to make very heavy weather of what should have been a well-planned communications exercise.
I serve on the student loan consultation group, which has been working with the HMRC policy team to ensure that employers would be able to capture necessary information about new employees who need to start repaying postgraduate loans (PGL) from 6 April 2019. To do this, a number of new questions relating to PGLs have been included on a new version of the starter checklist.
What actually happened
GDS control what is published on gov.uk, including the timing and format of all information.
GDS brought forward the publication of the Employer Bulletin from 14 February to 8 February without informing HMRC. The tax authority would have advised that this wasn’t a good idea, as the Employer Bulletin explicitly included a section on postgraduate loans that discussed the new version of the starter checklist. The link from that article was due to go to the revised starter checklist, but as the bulletin had been published too early the link went incorrectly to the current 2016 checklist.
Due to, what we have been told were, “unspecified IT issues” the 2019 starter checklist was not published by GDS until 12 February, meaning many employers would have downloaded the 2016 version of the checklist by then, thinking it was a new version when it wasn’t.
When the 2019 starter checklist was published on gov.uk we found it had been redesigned by GDS “to their standard”. GDS had also re-ordered some of the questions on the checklist, so the new version was now unusable. GDS had not informed HMRC that they had done this.
At the same time, GDS removed the 2016 version of the starter checklist indicating that their redesigned checklist was the only one to be used. This was not helped by a very odd gov.uk alert that simply said: “updated for post-graduation”.
Repairing the damage
Following complaints from myself and others (including HMRC), GDS removed the new version of the starter checklist on 21 February and restored the 2016 version. But the gov.uk alert indicated that this starter checklist was the new version, retrospectively updated to 2016!
On 1 March, an email alert was sent to those signed up to HMRC's business support emails (a very small group of employers), indicating that the 2019 version of the starter checklist would be available as soon as possible. No general email alert was published by GDS.
On 6 March, the correct 2019 starter checklist, ie back to what we had designed with HMRC, and the current 2016 checklist, were published on the starter checklist page of gov.uk.
After nearly a month, the right documentation was finally available to agents and employers. How do you know if what you have printed off is the right version? If should be dated 2/19 and have vertical columns on the reverse of the form – the left-hand side relating to student loans and the right-hand side relating to postgraduate loans.
What you need to know
The new 2019 starter checklist should not be completed by:
- An undergraduate or postgraduate who has completed their studies/left a course, but are starting a job before the next 6th April after they left their studies. Deductions never begin until the start of the first tax year after that event.
- An undergraduate who is working but still studying, including on a placement year in industry, unless unusually they have already received one undergraduate loan that is in repayment and are now taking a second degree. If that is the case, they will complete the form in respect of the first loan that is already in repayment.
- A postgraduate who is working whilst studying will be due to repay their undergraduate loan from 6th April after they finished their undergraduate studies.
- Anyone with a loan from 1998 or earlier.
- Anyone who is paying the student loan company by direct debit as they have been living overseas or are within two years of paying off their loan.
Conversely, the new starter checklist must be completed as a plan 2 undergraduate loan for:
- Those with an Advanced Learner loan, even though this will be a non-uni qualification loan taken by someone who is working.
- Anyone with a postgraduate healthcare loan such as taken out to study to be a midwife or dental nurse.
Anyone who has both a plan 1 and plan 2 loan and answers question 12 to that effect should be set up on Plan 1 repayments and the Student Loan Company will split the deductions between the two loan plans.
What payslips must show
On payslips issued from April 2019, there will potentially be two deductions: one for plan 1 or 2 loans and another deduction for the PGL. As the pay threshold for paying the PGL is £21,000 and the deduction is set at 6%, it may be the only deduction if the employee also has a plan 2 loan and has earnings below the £25,725 (the plan 2 threshold for 2019/20). If both deductions are due from the employee, he or she will suffer a total deduction of 15% for student loan repayments, on top of tax and NI due and increased pension contributions.
To accommodate PGL deductions a new format of the P60 will be in use for 2019/20.
It is self-evident that the P45 form used in isolation is insufficient to determine the correct student loan deductions as it hasn't been updated. It simply indicates there was a loan in repayment at the last employer, but not which sort of student loan.
Since 2012 when plan 2 loans were introduced, employers have defaulted to plan 1 in the absence of further detail on the starter checklist. This approach is no longer appropriate and all new starters must complete the starter checklist – assuming the employer has managed to track it down!
I hope GDS will learn from this SNAFU that their customers, in this case HMRC, design forms with stakeholders for a reason, also that aesthetics are not everything – usability of the form is more important.
About Kate Upcraft
Kate is a technical writer, editor and lecturer on all aspects of employing people - primarily payroll and HR matters.