We already know that the Plan 2 Student Loans threshold will be £21,000 next year. The Student Loans Company Website reports that the Plan 1 repayment threshold will increase to £17,775 from 06 April 2017.
According to the Website, this was published by the Department for Education (DfE) in its annual update to the ‘Interest Rates and Thresholds of Income Contingent Student Loans and Mortgage Style Student Loans’, though I cannot find it in the public domain. We have to remember that the DfE is only relevant to Great Britain. In Northern Ireland, responsibility sits with the Department for the Economy (also DfE). However, it is worth noting that, thankfully, Northern Ireland have always followed Great Britain previously.
Although, regardless of the fact that I cannot find the supporting documents that confirm this threshold increase to £17,775 (from £17,495), it is actually not too difficult to corroborate this by looking at the legislation itself.
You thought that there was just one piece of legislation? Think again…
The Education (Student Loans) (Repayment) Regulations 2009 say that the threshold will be amended in Great Britain each year. The Education (Student Loans) (Repayment) Regulations (Northern Ireland) 2009 also say the same thing. Both pieces of legislation say that the repayment threshold for the forthcoming tax year is:
- the repayment threshold for the previous repayment inflated by
- ‘the percentage increase between the retail prices all items index published by the Office for National Statistics for the two Marches immediately before the commencement of the previous [repayment threshold year]
This is rounded to the nearest £5. Essentially, and simply, the threshold for 2017/18 is the 2016/17 threshold multiplied by the Retail Prices Index at March 2016! This was 1.6%.
This is the simple part. The Student Loan threshold for 2017/18 is:
- the 2016/17 threshold £17,495 + 1.6% = £279.92
- rounded to the nearest £5 which is £17,775
We will have to await formal announcement of the threshold later in the year.
However, I hope that when it is announced HMRC and the SLC will produce the same guidance this year. For 2016/17, we have the anomaly that HMRC’s SL3 Student Loan Deduction Tables give the weekly and monthly threshold values in pounds and pence, just the way that payroll software will calculate the Loan deduction. However, the SLC Website and many factcards give rounded weekly and monthly thresholds. Payroll software does not calculate Loan deductions using rounded thresholds.
To be honest, I don’t actually care if we use rounded or unrounded thresholds. I just want factcards and communications to all say the same thing next year – too much to hope for?!