Student loans taken out after August 1998 start to be repayable once the borrower has started work and has earnings (or profits if they are self employed) in excess of £15,000 per annum.
If an employee liable to make student loan repayments changes jobs the theory is that the old employer marks the appropriate box on the P45 and when this is handed to the new employer, student loan repayments continue uninterrupted.
The problem
All well and good except that over 70% of those changing jobs fail to give a form P45 to their new employer.
The solution
From April 2006 there will be a new style form P46 which will require a new employee to state whether they are liable to make student loan repayments. A ‘yes’ will give the new employer the necessary authority to deduct repayments from the employee’s pay.
And another thing…
There will also be a number of other changes to the P46 including asking the employee to state whether he or she has another job. This is so that tax can be deducted at the basic rate rather than using the Emergency Code. However it also means that the employee must declare to the ‘main’ employer whether there is also a ‘second job’.