Did you know the new starter checklist has changed?

I ask this question because the Government Digital Service (GDS) have managed to make very heavy weather of what should have been a well-planned comms exercise that we on the student loan consultation group had been working on with the HMRC policy team for over a year.

Here’s the sequence of events:

  • The Employer Bulletin was brought forward from 14th February to 8th February by GDS without informing HMRC who would have advised that this wasn’t a good idea as the Bulletin explicitly had a section on postgraduate loans that discussed a new version of the starter checklist. The link was due to go to the revised checklist, but as it had been published too early the link in the Bulletin went incorrectly to the current 2016 checklist.
  • Due to, what we have been told were, ‘unspecified IT issues’ the 2019 checklist was not published by GDS until Tuesday 12th February, meaning many employers would have downloaded the 2016 version by then thinking it was new when it wasn’t. The 2019 checklist that was published had been redesigned by GDS ‘to their standard’ and they also re-ordered some of the questions, so it was unusable. They had not informed HMRC that they’d done this. At the same time, they removed the 2016 version indicating that their re-design was the only one to be in use immediately, not helped by a very odd .gov alert that simply said ‘updated for post-graduation’
  • Following complaints from myself and others (including HMRC) GDS removed the new version on 21st February and put the 2016 version back, but indicated again in the alert that this was the new version, retrospectively updated to 2016!
  • On 1st March an email alert was sent to those signed up to HMRC’s ‘business support emails’ ie a very small group of employers, indicating that the 2019 version would be available as soon as possible, no general email alert was published by GDS
  • On 6th March the correct 2019 checklist, ie back to what we had designed with HMRC last year, and the current 2016 checklist were published alongside each other on .gov as was the expat starter checklist

So, after nearly a month at last we had the right documentation available to agents and employers. How do you know if what you have printed off is the right version? It should be dated 2/19 and have vertical columns on the reverse of the form – the left-hand side relating to student loans and the right-hand side to post graduate loans.

It will probably strike you that new employees need a PhD to complete this most vital of forms! They’ve always struggled with answering statements A-C and now with a large number of student loan questions we’ll soon find people can just about complete their name and address and leave the rest blank.

Here then are a few pointers about the new starter checklist…

It should not be completed by:

  • An undergraduate or postgraduate who has completed their studies/left a course, but they are starting a job before the next 6th April after they left their studies. Deductions never begin until the start of the first tax year after that event.
  • An undergraduate who is working but still studying, including on a placement year in industry, unless unusually they have already received one undergraduate loan that is in repayment and are now taking a second degree. If that is the case, they will complete the form in respect of the first loan that is already in repayment.
  • A postgraduate who is working whilst studying will be due to repay their undergraduate loan from 6th April after the finished their undergraduate studies
  • Anyone with a loan from 1998 or earlier
  • Anyone who is paying the student loan company by direct debt as they have been overseas or are within 2 years of paying off their loan
  • Conversely it must be completed as a plan 2 undergraduate loan for:
  • Those with an Advanced Learner loan, even though this will be a non-uni qualification loan taken by someone who is working.
  • Anyone with a postgraduate healthcare loan such as taken out to study to be a midwife or dental nurse

Anyone who has both a Plan 1 and Plan 2 loan and answers question 12 to that effect should be set up on Plan 1 and the student loan company will split the deductions between the two loan plans.

On payslips from April there will potentially be two deductions, one for Plan 1 or 2 and one for the postgraduate loan (shown as PGL). As the PGL deduction starts at £21,000 and is set at 6% it may be the only deduction if the employee is on Plan 2 and has earnings below the £27,725 plan 2 threshold for 2019/20. If both deductions are in point, there will be a total 15% deduction.

If the undergraduate deduction suddenly ceases, it is likely that the employee has a court order with protected earnings such that there are insufficient monies left after meeting the terms of the order for both loans to be deducted in full. If this is the case the PGL will take priority as it has the higher interest rate.

To accommodate PGL deductions a new P60 will be in use for 2019/20 and this has been provided to the software developers so can be obtained on this link for employers who have bespoke stationery and want to see the layout.

Given the complexities of the new form its self-evident that the P45 in isolation is insufficient to determine the correct student loan deduction as it hasn’t been updated, so simply indicates there was a loan in repayment at the last employer, but not which sort. Since 2012 when plan 2 was introduced, we have defaulted to Plan 1 in the absence of further detail on the starter checklist but this isn’t now appropriate and all new starters must complete the checklist – assuming you’ve managed to track it down despite the best efforts of GDS! Hopefully they will learn from this that their customers, in this case HMRC, design forms with stakeholders for a reason and that aesthetics are not everything – usability is more important.