Issue an employee loan

What this achieves

An employee loan is repaid through recurring payroll deductions, taken automatically each run until the balance is cleared. Creating it here is what connects the money lent to the deductions that recover it.

Required role: Administrator.

Before you start

A loan policy should exist for the loan type first. Without a policy there are no lending limits, so any amount is allowed — and the limits are what stop a loan being written that the employee cannot service.

Steps

Go to Payroll → Loans.
Select New loan.
Choose the Employee.
Choose the Pay group.
Enter a Loan name.

Example: Car loan. The employee sees this, so name it for them.
Enter the Principal and the Installment / period.
Set the First deduction date.
Choose the Deduction element, which is optional.
Select Create loan.

The term is derived, not entered

You enter the principal and the installment; Humavera works out how many installments that implies and shows it as you type. This is the fastest way to sanity-check a loan before creating it.

Example: a principal repaid at a given monthly installment shows the resulting number of installments straight away. If that number is longer than Tom Hargreaves is likely to stay, the installment is too small.

Options on this screen

Option	Description
Employee	Who the loan is for.
Pay group	The group whose runs will take the deduction.
Loan name	What the loan is called. It appears to the employee.
Principal	The amount lent.
Installment / period	The amount deducted each pay run.
First deduction date	When deductions start.
Deduction element	Optionally, the pay element the deduction is recorded against. Choosing one sets how the deduction appears on the payslip.

Loan status

Option	Description
Pending approval	Created and awaiting approval.
Active	Being deducted each run.
Settled	Fully repaid.
Cancelled	Ended without completing repayment.

Deductions happen inside the run

Once a loan is active, its installment is taken automatically by each regular pay run — you do not enter it per period. Repayments are tracked to a ledger, so the balance and what has been recovered are both visible on the loan.

One exception matters: an off-cycle run does not deduct installments unless you switch that on, so a one-off correction run does not take a second installment in the same month.

A cheap loan can carry a taxable benefit

Where your statutory profile defines an official rate, a loan priced below it shows a Taxable benefit panel on the loan. It reports the imputed interest for the period, and names the official rate against the rate the loan actually charges.

The figure is an estimate. The payroll run recalculates it against the balance on the day it runs.

Example: a staff loan at HC Corp UK Ltd priced below the official rate shows the gap as a benefit each period. A loan at or above that rate shows no benefit, because there is nothing to impute.

Two cases produce no charge and say so: a balance under the de-minimis threshold, and a flat-fee loan, which is excluded because a one-off fee has no annual rate to compare against.

Whether any of this applies to your people is a question for your own advisers. Nothing is imputed at all unless an official rate has been configured, and it is off unless somebody sets it.

Loans that need attention

The list can be filtered for loans needing attention, including those awaiting waiver approval, those with a pending schedule change, and where a benefit charge is unprocessed. Check that filter before a run rather than after, since anything unresolved affects what the run deducts.

What happens next

Each finalised run reduces the balance by one installment until the loan settles. The employee sees their own loans and the remaining balance in their self-service view. If someone leaves with a balance outstanding, resolve it as part of their final settlement, because a finalised settlement cannot be edited afterwards.