If you have received a letter from IRD stating that compulsory extra deductions must be made, we have a special deduction option to use. It must be set up in this way, as these deductions must be filed to IRD using the correct code. Using this option ensures that we classify it to the right code for you.
These are called SLCIR deductions.
These specify that the employee should repay an additional 5% of their gross earnings over the student loan threshold. Historically, these letters used to specify that the employee needed to pay an additional 41.67% of the student loan value in each period. Even though the letters look different, the resulting value is still the same. Your employee's normal student loan repayment is 12% of gross earnings over the student loan threshold. 41.67% of the student loan value (which is only 12% of their pay) is the same as 5% of gross earnings.
Create the debt
First, create the debt.
Go to the ‘Employees’ section.
Select your employee from the list, then select the ‘Debts’ tab on the right hand side.
Click on the blue plus button on the right hand side to start setting up a new debt.
Enter a name for the debt (for example, student loan arrears) as well as the total value to be repaid (not the amount to deduct each pay).
Click 'yes' to the question 'is this a student loan arrears debt'.
Click Ok to save.
Create the deduction
Create the deduction for the amount to be deducted from your employee's pay each period.
Go to the ‘Deductions’ tab of your employee’s settings.
Click on the blue plus button in the right hand corner.
In the ‘Rule’ field, select % student loan deduction.
In the ‘Title’ field, give the deduction a name. The employee will be able to see the name of the deduction on their payslip.
In the ‘Frequency’ field, select Linked debt and choose the student loan arrears debt you have created in the previous step.
Set the percentage to 41.67.
Click Ok to finish, then save in the top right corner.
The deduction will automatically be calculated in each pay, and turn off when the total debt amount is repaid.
It is possible to also set up SLCIR deductions from the employee’s tax code area. We suggest you only use this if you don’t know the total debt value from IRD. The method described above is the preferred method.