On my recent SLC annual statement, I noticed my total repayment figure stated for the year was very low, about half of what it should have been. Looking at my P60 I can see that the SLC payment figure my employer has stated is also incorrect, and it’s this information that been given to the SLC.
Then I realised I’d changed employers half-way through that year, and that my P60 only reflected payments from my new employer. Why not from the old employer? Turns out that while a P45 has a box that says ‘Student Loan Repayments to continue’, it has absolutely nothing to record the Student Loan repayments made to date in the financial year. Therefore the new employer has absolutely no information to pass on to the SLC at the end of the financial year, and this causes the discrepancy.
HMRC’s website has a PDF describing what to do with Student Loan deductions and P45s, which you can see here.
Now, if you give that a read you’ll see that the ‘advice’ given in this area is no advice at all. It admits that the P45 won’t carry over any information to the new employer, and to refer any enquiries to the SLC. The ONLY thing it says in relation to this problem is that it’s very important to keep your payslips and your P60.
This gives rise to the following scenario:
Jack earns £100,000 a year and automatically pays £630 from his payslip each month as a student loan repayment.In February of one year, Jack gets a new job, hands over his P45, and begins working for his new company in March on the same salary. At the end of March, Jack pays £630 to the SLC as normal.In April Jack’s new employer processes his P60, and states the total SLC deductions for the year (the only one they know about) as £630. This information is sent to the Student Loans Company and they update his balance to show £630 of payments.
Jack has paid a total of £7560 in repayments for the year, but his balance only decreases by £630.
Now, who’s at fault here?
New employer? They can only work with the information they’re given on the P45. They haven’t fucked up, because there’s no way for them to know what you’ve paid.
Old employer? They have no way of conveying what you’ve paid in the financial year to date. They can specify the tax you’ve paid, which is fine (except it’s not, for reasons I’ll come to shortly), but there’s no box for ‘SLC payments’.
SLC? They can only work with what they’re given on the P60. They’re too stupid to be able to reconcile what they’ve actually received via HMRC for you, so they’re entirely reliant on your employer telling them on a piece of paper once a year.
HMRC offer no advice, and if you don’t realise, you’re getting fuck fuckity fucked and there’s nothing in place to catch the discrepancy. Anyone reading this that has repaid a student loan after 1998, and has changed employers at any point thereafter has almost certainly been screwed over in this way.
The ONLY way to fix this is to realise yourself, manually reconcile all of your payslips against your P60 (assuming you kept them), and send them as evidence to the SLC. They may then eventually update your record to reflect your true payments. I’m guessing that’s the next step, but I haven’t got that far yet.
Why isn’t there a gigantic klaxon going off somewhere to alert people to this problem? You could have overpaid thousands of pounds in student loan payments and never have realised.
I’ve gone back over payslips, P60s, and student loan statements for the last three years. I’ve been caught by both of my job changes in that time and I’ve actually paid off far more of my loan than the SLC is aware of.