Nanny may have an outstanding student loan when she starts working for you, this will either be noted on her P45 from previous employment, or HMRC will send a notice through to you or your payroll agent.
If nanny does not have a P45 from previous employment, she must complete a Starter Checklist. On the Starter Checklist it will ask if nanny has a student loan and what Plan she is on.
Student Loan deductions from nanny’s gross wage are payable to HMRC along with her tax, National insurance and employers National Insurance. This will be paid to HMRC quarterly unless your PAYE exceeds £1,500 a month.
The thresholds for Student Loan deductions from April 2020 are:
- Plan 1 – £19,390 annually (£1,615.83 a month or £372.88 a week)
- Plan 2 – £26,575 annually (£2,214.58 a month or £511.05 a week)
Nanny’s pays 9% of her salary above these thresholds.
Plan 1 is for students that lived in England, Wales, Scotland and Northern Ireland and started their course before September 2012.
Plan 2 is for students that lived in England and Wales who started their course after September 2012.