Tax codes: Student loan repayment deduction exemptions

Student loan repayment deduction exemptions

If your employee is studying full-time, they may qualify for a repayment deduction exemption. The exemption certificate means you don't need to make any student loan deductions made from their earnings. The certificate will not be specifically addressed to you as your employee may need to give a copy of the certificate to more than one employer during the exemption period.

The repayment deduction exemption authorises you to stop making student loan repayment deductions from your employee's salary or wages during the exemption period stated on the certificate.

Repayment deduction exemptions on your employer monthly schedule

When a repayment deduction exemption applies, your employee's tax code should not include the "SL" repayment code. For example, if:

• the tax code is"M SL" then you'll need to change it to "M" on your employee monthly schedule, or
• the tax code is"S SL" change it to "S".

If your employee has a special tax code for their income tax deductions, the tax code should be shown as "STC".

Your employee must give you a new repayment deduction exemption certificate when the current one expires or you will need to start making standard student loan deductions based on the tax code they were on before the exemption was granted. If this tax code is incorrect they will need to give you a completed Tax code declaration (IR330).

Date published: 26 Jan 2012

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