In September 2023, HMRC warned that it had identified a small number of student loan borrowers who had been overcharged student loan repayments on their SA return.

HMRC said that its SA system uses the total pay as you earn (PAYE) income declared on the SA return when calculating student and postgraduate loan deductions. However, this may include payrolled BIKs. Student and postgraduate loan deductions are not due on payrolled BIKs that are subject to class 1A national insurance contributions (NIC) only. 

To prevent this from happening for 2023/24, HMRC published guidance setting out the steps the taxpayer should take when completing their return. 

2024/25 SA returns

HMRC has now announced that a new box will be included in the SA return for 2024/25. This will allow the taxpayer to enter relevant payrolled BIKs separately to total PAYE income.  

HMRC says that the taxpayer should report any payrolled BIKs subject to class 1A NICs in:

• box ‘Payrolled benefits included in pay from employer which affect your student loan repayments’, if completing their return online; or
• box ‘Payrolled benefits included in box 1 which affect your student loan repayments’, if completing a paper return. 

Interaction with mandatory payrolling

Currently, an employer can choose whether to payroll benefits. The government has announced that payrolling of benefits will be mandatory from April 2026.

In February 2025, ICAEW set out a number of concerns with mandatory payrolling in a representation to HMRC, which included the interaction with student loans. ICAEW called for:

• guidance to be published to help taxpayers identify which BIKs should be taken into account; and 
• this to be taken into account in designing the benefits statement that employers will be required to give to employees. 

To learn more about payrolling of benefits, read the explainer article published by ICAEW.