Guidance for employers on making employees’ student loan and postgraduate loan deductions in different circumstances has been updated with a correction (21st October 2025).
The change made: Information about what to do if an employee dies has been corrected.
Previously the guidance implied that student loan deductions paid to an employee who was subject to a student or postgraduate loan deductions paid who has unfortunately died would require employers to apply the deduction on earnings paid after death where work had been undertaken before. The prior implication was that that aligned with the operation of National Insurance.
However, representation was made by PAYadvice.UK’s very own P Simon Parsons who is representing the BCS (Chartered Institute for IT) Payroll Group, that that position was not in alignment with National Insurance regulations where all payments after death, no matter when worked, are not subject to Class 1 NICs. The same earnings being paid after death should equally not be subject to student or postgraduate loan deductions.
Following review of the regulations, HMRC and the Student Loan Company have agreed and have corrected guidance.
New corrected guidance
The new guidance now states:
‘Employee dies
Earnings paid after a person dies does not attract any Class 1 National Insurance contributions, so student loan or postgraduate loan repayments are not due.
Do not make any student loan and or postgraduate loan (PGL) deductions from any payments made after the date of death, even if this was relating to earnings before or after the date of death. Examples of types of income earned before death and paid include:
- wages
- holidays accrued
- final bonus payment’
Consultation group
PAYadvice.UK 21/10/2025