How are Student Loan repayments calculated? What happens if an individual has more than one job? How are repayments collected under PAYE? How are repayments collected under Self Assessment?
This is a freeview 'At a glance' guide to Student Loan deductions.
How are Student Loan repayments calculated?
Student Loan repayments are calculated as a percentage of income over the threshold for the type of loan. Annual thresholds are:
| 2025-26 | 2024-25 | |
| Plan 1 | £26,065 | £24,990 |
| Plan 2 | £28,470 | £27,295 |
| Plan 4 | £32,745 | £31,395 |
| Postgraduate loan | £21,000 | £21,000 |
The rates for 2024-25 and 2025-26 are:
- Plan 1, 2 or 4: 9% of earnings over the threshold.
- Postgraduate loan: 6% of earnings over the threshold.
Plan 5 is a new Student Loan repayment plan for students in England starting their course after 1 August 2023.
- Repayments will start from 6 April 2026 under PAYE (6 April 2027 under Self Assessment), with the annual threshold for repayment set at £25,000. Repayments of 9% of earnings over the threshold will be collected.
If a taxpayer has more than one Student Loan and:
- Has no postgraduate loan: repayments are calculated as 9% of earnings over the lowest threshold out of the plan types they have.
- Has a postgraduate loan, repayments are calculated as:
- 6% of earnings over the postgraduate loan threshold.
- 9% of earnings over the lowest threshold for any other plan types they have.
If the taxpayer has more than one job, they will only make repayments from jobs where they are paid over the threshold, not their combined earnings.
If the taxpayer has a deduction from earnings under a Salary sacrifice arrangement, this will reduce their income for the purpose of comparing it to the above thresholds and calculating Student Loan repayments.
How are Student Loan repayments collected under PAYE?
Repayments will be deducted from the taxpayer's gross salary through the payroll.
- Employers should use the same gross pay amount that would be used to calculate the employer's secondary Class 1 National Insurance Contributions (NICs).
- Earnings from other employment are ignored.
- Deductions are non-cumulative and rounded down to the nearest pound.
- Deductions are Paid over to HMRC at the same time as PAYE tax and NICs.
- Total deductions made in a tax year are recorded on form P60 and reported on the Full Payment Submission.
The employer should start to make deductions if:
- A new employee's P45 shows that deductions should continue.
- A new employee tells the employer they are repaying a student loan.
- The starter checklist shows that the employee has a student or postgraduate loan.
- HMRC sends a start notice (SL1 or PGL1).
- The employer receives a student and/or postgraduate loan reminder.
If you do not know which plan the employee is on, use Plan 1 until you receive a start notice from HMRC (note: from 2026-27, Plan 5 will be the new default plan type to use).
If you are operating Off-payroll, you are not responsible for deducting student or postgraduate loan repayments for workers engaged through their own companies.
- The worker will make student loan repayments under Self Assessment. See below.
The employer should stop making deductions if:
- HMRC sends a stop notice (SL2 or PGL2).
- HMRC asks the employer to stop making deductions.
The employer should keep the following records for at least three years after the end of the tax year to which they relate.
- All wages relating to the calculation and deduction of repayments.
- Other documents relating to the calculation and deduction of repayments.
- SL1 and PGL1 start notices and SL2 and PGL2 stop notices.
How are Student Loan repayments collected under Self Assessment?
If the taxpayer is self-employed, Student Loan repayments will be calculated based on the taxpayer's income for the tax year. This will include:
- Employment income.
- Sole trade and partnership profits.
- Property income.
- Unearned income in excess of £2,000.
If repayments have already been made through PAYE, these will be deducted from the amount owed under Self Assessment.
The taxpayer will need details of the following when they file their Self Assessment tax return:
- Loan or repayment plan type.
- Amounts already deducted through employment.
- Payrolled Benefits In Kind.
- From the 2024-25 tax year, there is a new box on the tax return to report these.
- These are not included in the calculations for Student Loan repayments.
- See Agent Update 129: March 2025 for further details.
If the taxpayer is subject to the Off-Payroll Working rules, their deductions will be calculated through their Self Assessment tax return.
Student Loan repayments do not impact the calculation of Payments On Account (POAs).
Voluntary payments
Taxpayers can make additional payments to the Student Loan Company. This will not change the amounts collected under PAYE or through Self Assessment.
Useful guides on this topic
PAYE: Paying HMRC
How do I pay PAYE to HMRC? What payment methods are there? What payment reference should I use?
Off-Payroll Working: At a glance
What is Off-Payroll Working? What is IR35? What are the tax rules for Off-Payroll Working or IR35? How do you check employment status? What is a personal service company?
Payrolling of benefits
The value of certain taxable Benefits In Kind can be included in taxable pay when calculating the PAYE deducted from payments of wages and salaries to employees.
Agent Update 129: March 2025
HMRC have published their Agent Update for March 2025. We have summarised the key content with links to our detailed guidance on the topics covered, including changes to company size thresholds for Off-Payroll Working, reporting payrolled benefits for self-assessment and student loan purposes, and changes to the claims process for Creative Industries Tax Reliefs.
Students & Tax
There are no special tax rules for students, although there are a few pitfalls to watch out for.
Students: Top Tax FAQs for Students
Our top tax tips for students, answering your FAQs.