Employee Tax Codes

If an employee needs to make student loan repayments, you must select the relevant Tax code in their record. Tax codes with "SL" indicate that an employee has a student loan. For example, Michael Smith's tax code is M SL.

1. Open Michael Smith’s employee record.
2. Navigate to his Payroll | Payroll | Tax tab.
3. In the Tax code pick list, double-click M SL.

   

4. Click Save + Close.

Student Loan Tax Codes

Ensure that you select the correct tax code in the employee’s record. If the employee does not use the correct code, then you may not deduct the correct amount and the employee could receive an end-of-year tax bill.

Note: Inland Revenue states that the employee is responsible for ensuring that the employer has selected the correct tax code in the employee’s record.

Tax codes for main income:

Tax codes for secondary income:

Other tax codes:

The main income tax codes use the student loan threshold. They exclude the employee's first $19,084 (annual) or $367 (weekly) of gross earnings and calculate the 12% student loan repayment on the earnings over the threshold.

The secondary income and STC SL tax codes do not use the student loan threshold. They calculate the 12% student loan repayment on the employee's total gross earnings for the pay. 

Topic: 18125