Part of our complete guide to personal tax reliefs.
Why the plan you're on actually matters
Student loan repayments aren't a single flat system, which plan you're on determines the income threshold above which you start repaying, and the percentage deducted above that threshold. Two people with identical salaries can have meaningfully different repayment amounts if they're on different plans, so knowing your specific plan matters for understanding your actual take-home pay.
The plans at a glance
- Plan 1: generally applies to English and Welsh students who started courses before September 2012, and all Northern Irish students, with the lowest repayment threshold of the undergraduate plans
- Plan 2: generally applies to English and Welsh students who started between September 2012 and 2023, with a higher threshold than Plan 1
- Plan 4: applies to Scottish students, with its own separate threshold set by the Scottish Government
- Plan 5: applies to English and Welsh students starting courses from September 2023 onward, replacing Plan 2 for new starters
- Postgraduate Loan plan: a separate plan for postgraduate master's or doctoral loans, with its own threshold and lower repayment rate, which can run alongside an undergraduate plan
Key point: The threshold and rate differences between plans are genuinely significant, not a rounding difference. Someone unsure which plan they're on should check before assuming their payslip deduction is correct, payroll systems rely on the plan type HMRC has on file, and an outdated plan type produces the wrong deduction.
How repayments actually work through payroll
If you're an employee, your employer deducts student loan repayments automatically through PAYE, calculated on income above the threshold for your specific plan, in the same payroll run as your tax and National Insurance. You don't need to do anything beyond making sure your employer has the correct plan type recorded, usually confirmed on your starter checklist when you join a new employer.
Self-employed borrowers work differently
If you're self-employed, there's no payday deduction, instead your student loan repayment is calculated once a year as part of your Self Assessment return, based on your total income for the tax year above the relevant threshold. This means the repayment lands as part of your annual tax bill rather than being spread across the year, worth factoring into how much you set aside for your tax bill.
Not sure which plan you're on, or whether your deductions are right? Book a free consultation and we'll check it as part of our Self Assessment service.
Frequently asked questions
How do I know which student loan plan I'm on?
It generally depends on when and where in the UK you started your course, your loan provider or the Student Loans Company online account will confirm which plan applies to you specifically.
Can I be on more than one repayment plan at once?
Yes, it's possible to have both an undergraduate plan and a Postgraduate Loan plan running simultaneously, each with its own separate threshold and rate, both deducted at the same time.
Does being self-employed change how student loan repayments work?
Yes, self-employed borrowers repay through Self Assessment rather than automatic payroll deduction, calculated once a year based on your total income for the tax year, rather than deducted each payday.
What happens if too much gets deducted from my salary?
Overpayments can happen, particularly with fluctuating income, and are generally refundable, either automatically through the following year's Self Assessment reconciliation or by contacting the Student Loans Company directly.