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Student loan repayments and payrolled benefits

Author: ICAEW Insights

Published: 21 Oct 2025

Contents
ICAEW is reminding taxpayers to complete a new box on their 2024/25 income tax self assessment (ITSA) tax return where their employment income includes payrolled benefits in kind (BIKs) and they make student loan repayments.

Employers have the option of payrolling most types of BIK. This means that tax due on BIKs provided to the employee is collected during the tax year from the employee’s pay, rather than through the end of year form P11D process. Payrolling of BIK will become mandatory for employers from April 2027.  

Issue identified by HMRC 

In September 2023, HMRC identified an issue with payrolled BIK and student loan repayments. Student and postgraduate loan deductions are not due on payrolled BIKs that are subject to class 1A national insurance contributions (NIC) only. However, HMRC’s systems used the total pay as you earn (PAYE) income declared on the ITSA return, which may have included payrolled BIKs, when calculating student and postgraduate loan deductions. This resulted in some taxpayers being overcharged on student loan repayments.   

BIKs subject to class 1A NIC 

Most BIKs are subject to class 1A NIC only, including: 

  • company cars and vans;
  • fuel for company cars and vans;
  • private medical and dental insurance; and
  • goods and other assets provided by the employer. 

A full list of BIKs subject to Class 1A NIC only is provided in HMRC’s guidance.  

Completing 2024/25 tax returns 

To address this issue, a new box has been added to the employment supplementary pages (SA102) of the ITSA tax return for 2024/25. This allows payrolled BIKs to be reported separately from total PAYE income and should help avoid student loan overpayments. 

The new box should be completed where: 

  • the taxpayer is within ITSA;
  • they are repaying a student or postgraduate loan; and
  • their employer has payrolled BIK that are subject to class 1A NIC only.  

A taxpayer in this position should enter: 

  • the total PAYE income shown on their P45 or P60 in the ‘pay from employer’ box (box 1 of the employment pages if they are completing a paper return); and 
  • the total for class 1A NIC payrolled BIKs in the ‘Payrolled benefits included in pay which affect your student loan repayments’ box (box 1.1). 
Further details, including examples, are provided in HMRC’s guidance. The guidance includes how to complete the ITSA tax return for 2023/24.   

How to complete your tax return

Our 10-part weekly series ICAEW highlights some of the key things to keep in mind when completing a tax return for 2024/25.
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