The 2016/17 Tax Year is the first in which some former students will begin to pay back their Plan 2 student loans. The unlucky ones may be having to repay a combination of Plan 1 (around since 1998) and Plan 2!
For those in permanent employment the task of working out how much has to be deducted each month from their salary falls to their employer. The employer is responsible for collecting and accounting for the deductions made to HMRC at the same time as the PAYE and National Insurance Contributions they also deduct.
At the end of the tax year HMRC will transfer the Student Loan deductions over to the student loan company for crediting to the individual student's loan account.
For those students working as limited company contractors you need to remember that you may, depending on your income level, have to pay additional student loan Repayments through your Self-Assessment Tax Return on 31 January each year. The reason for this is that repayments are calculated not just on earnings but other income types. So in the event that you take your remuneration by way of a small salary and a much higher amount of dividends the calculation of the amount of your repayment will include your dividends too.
For the 2016/17 Tax Year income contingent plan 1 student loans are triggered at income levels of £17,495 pa. That' a monthly amount of £1,457. The Plan 2 threshold is £21,000 or a monthly income level of £1,750. When your income reaches these thresholds the deductions run at 9%.
Working out the repayments due on mixed Plan 1 & 2 loans can be confusing but you may find the student loan company website to have helpful information.