Quick answer for 2026/27: Plans 1, 2, 4 and 5 charge 9% above their own thresholds. A Postgraduate Loan charges 6% above £21,000. Use the student loan repayment calculator for a projection, or the take-home pay calculator for the deduction alongside Income Tax and National Insurance.
Student loan repayment thresholds for 2026/27
The official GOV.UK repayment table gives annual, monthly and weekly thresholds. Payroll normally uses the threshold matching the pay period, so dividing an annual estimate by 12 will not always reproduce a payslip exactly.
| Loan | Annual threshold | Monthly threshold | Weekly threshold | Rate above threshold |
|---|---|---|---|---|
| Plan 1 | £26,900 | £2,241 | £517 | 9% |
| Plan 2 | £29,385 | £2,448 | £565 | 9% |
| Plan 4 | £33,795 | £2,816 | £649 | 9% |
| Plan 5 | £25,000 | £2,083 | £480 | 9% |
| Postgraduate Loan | £21,000 | £1,750 | £403 | 6% |
These figures apply from 6 April 2026 to 5 April 2027. They are repayment thresholds, not tax-free allowances. If earnings are below the relevant threshold in a pay period, the compulsory deduction for that plan is zero. Once earnings exceed it, only the excess is multiplied by 9% or 6%.
Which plan applies?
Plan type mainly depends on the country that provided the finance, the course level and the date the course began. The official plan checker is the safest source because transfers, repeat study and older loans can complicate a simple date rule.
- Plan 1 commonly covers older English and Welsh undergraduate borrowing and Northern Irish undergraduate borrowing.
- Plan 2 commonly covers English and Welsh undergraduate courses starting from September 2012, before Plan 5 eligibility began in England.
- Plan 4 is used for Scottish student finance borrowers.
- Plan 5 applies to eligible English undergraduate courses starting from August 2023.
- A Postgraduate Loan is separate borrowing for eligible master's or doctoral study and can sit alongside an undergraduate plan.
Do not guess from where you now live or work. Moving from Scotland to England, for example, does not turn Plan 4 into Plan 2. Your Student Loans Company account, start notice or employer information should identify the plan.
How payroll calculates a deduction
For PAYE, the employer compares earnings in that pay period with the weekly or monthly threshold. The relevant earnings measure broadly follows pay liable to employer Class 1 National Insurance. Salary, overtime, commission and bonuses can therefore count before Income Tax or ordinary deductions are removed. Payroll deducts the prescribed percentage from the excess and reports it to HMRC.
Worked example 1: Plan 2 on £36,000
| Step | Calculation | Amount |
|---|---|---|
| Annual earnings | Given | £36,000.00 |
| Plan 2 threshold | 2026/27 | £29,385.00 |
| Earnings above threshold | £36,000 - £29,385 | £6,615.00 |
| Annual repayment | £6,615 x 9% | £595.35 |
| Average monthly equivalent | £595.35 / 12 | £49.61 |
This is an annual illustration. A monthly payroll uses £2,448 for each monthly pay period and applies payroll rounding, so the amount shown on individual payslips can differ slightly from £49.61.
Worked example 2: Plan 2 plus a Postgraduate Loan on £45,000
| Deduction | Calculation | Annual amount |
|---|---|---|
| Plan 2 | (£45,000 - £29,385) x 9% | £1,405.35 |
| Postgraduate Loan | (£45,000 - £21,000) x 6% | £1,440.00 |
| Combined | £1,405.35 + £1,440.00 | £2,845.35 |
| Average monthly equivalent | £2,845.35 / 12 | £237.11 |
The deductions stack because they are different loan categories. By contrast, two undergraduate plan types do not normally produce two separate 9% charges. HMRC applies the undergraduate deduction using the lowest applicable threshold and allocates the payment between balances.
Bonuses, overtime and variable pay
A common surprise is a deduction in a bonus month even when annual salary is near or below the annual threshold. PAYE looks at that pay period. A £3,500 monthly payment is compared with the monthly threshold, not smoothed across the year. The same can happen with overtime, arrears or a final payment after leaving.
If total income for the completed tax year is below the annual threshold for the plan, GOV.UK says you can ask the Student Loans Company for a refund of deductions. A refund is not automatic in every circumstance, and taking one restores the amount to the outstanding balance. Keep the P60 and final payslip available when checking eligibility.
Pensions and salary sacrifice: an important distinction
An ordinary workplace pension using the net pay method reduces pay subject to Income Tax, but it does not usually reduce pay liable to Class 1 National Insurance. Student loan deductions follow the latter earnings concept, so the pension contribution should not normally reduce the student loan calculation. This is why the NHS pay examples on MySums calculate student loan repayments from gross pensionable cash pay, not the lower Income Tax figure.
A genuine salary sacrifice is different. The employment contract is changed so cash salary is lower and the employer contributes instead. Under current 2026/27 rules, that can reduce Class 1 earnings and therefore a student loan deduction. The salary sacrifice guide explains the current rule and the separate change scheduled for April 2029.
Self Assessment and income outside PAYE
Self Assessment reconciles the whole tax year. The return asks about the loan plan, and the calculation credits amounts already deducted by employers. Self-employed profits and other relevant income can therefore create an additional amount due by 31 January with the rest of the Self Assessment bill.
HMRC's Self Assessment student loan guidance also explains the rule for unearned income. If relevant unearned income is £2,000 or less, it is disregarded for this purpose. If it exceeds £2,000, the whole relevant amount can enter the calculation, rather than only the slice above £2,000. This can matter for landlords and investors.
Interest and the balance are separate from the deduction
Interest changes the balance, but it does not change the compulsory percentage taken at a given income. For 1 September 2026 to 31 August 2027, the Department for Education announced RPI of 4.1% as the base for the main income-contingent plans. Plan 1 and Plan 5 are normally 4.1%, subject to applicable caps and the Plan 1 bank-rate rule. Plan 2 varies with circumstances and income, with a 6% maximum cap for that period. Postgraduate borrowing is also capped at 6% for that period. Plan 4 is administered under Scottish terms, so check the current Student Awards Agency Scotland or SLC rate rather than assuming an English plan rate.
Interest rates use an academic-year style period and can be changed by prevailing market rate caps. They are not fixed merely because a tax-year repayment threshold is fixed. The figures above were checked on 24 August 2026.
How to check a payslip deduction
- Confirm the plan in your SLC account or start notice.
- Use gross pay that is relevant for Class 1 National Insurance, not take-home pay.
- Use the weekly or monthly threshold matching the payslip frequency.
- Apply 9% for the undergraduate plan and, where applicable, 6% separately for the Postgraduate Loan.
- Allow for payroll rounding and check year-to-date totals on the P60.
- Ask payroll to check the plan notice if the wrong plan appears, and contact SLC about balance allocation or refunds.
For broader pay planning, use the Salary and Pay calculators hub or the Loans and Personal Finance hub. The calculator estimates are educational and cannot see an employer's exact payroll record, irregular-period adjustments or SLC balance updates.