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How to process a student loan stop notice

Learn how to stop student loan deductions after receiving a stop notice and what to do if an employee has overpaid.

 Step 1: End the existing tax code record

  1. Go into the employees person record, then click into the payroll section and the tax screen.
  2. Open the employee’s current tax code record.
  3. Enter an 'Effective To' date based on the HMRC notification.
  4. Select Save and Close.

    Gif 1

 Step 2: Add a new tax code record

  1. Add a new tax code record from the next effective date.
  2. Use the tax code without the student loan deduction.
  3. Leave the Effective To date as Open Ended.
  4. Select Save and Close.

Gif 2

 What happens next?

The previous tax code record is ended and the new open-ended record applies without student loan deductions.

Note 📝

If an employee has overpaid student loan deductions, do not refund the overpayment through payroll. The employee must contact HMRC to request repayment.

View HMRC guidance on student loan overpayments