Come April 2025, the National Minimum Wage jumps to £12.21 per hour. Good news for workers. Tougher decisions for employers.
For graduates, though, that extra bump in earnings could mean an unwelcome surprise – automatic student loan repayments.
While it is not an employer’s job to cover those costs, it is your responsibility to ensure deductions are handled correctly.
The repayment thresholds
Student loan repayments kick in when earnings go beyond a set level. Here is where the thresholds currently stand:
Once an employee’s salary crosses these figures, they will see nine per cent of their earnings above the threshold deducted straight from their pay.
When you add in Income Tax and National Insurance (NI), some could find themselves with an effective tax rate nearing 37 per cent.
Why does this matter to employers?
Payroll errors cause stress. Nobody enjoys opening their payslip to find unexpected deductions, especially when overtime or a small raise pushes them over the repayment line.
Confusion leads to complaints. Complaints take up your time. Getting ahead of the issue now can save frustration down the line.
Steps to prepare your workforce
