If the Student Loans Company has told HMRC your repayments have started, your Self Assessment return calculates them on your whole income for the tax year: 9% above your plan threshold for Plan 1, 2, 4 or 5 loans and 6% above £21,000 for a postgraduate loan. Self employed profits and other income count in full, but savings, dividends, rental profits and other unearned income are ignored unless they total more than £2,000. Amounts already deducted through payroll are credited, and the balance is due with your tax on 31 January.

Who has to deal with a student loan on their tax return?

GOV.UK says you need to complete the student or postgraduate loan section of your return if the Student Loans Company (SLC) has said your repayments were due to start on or before 6 April of the year you are reporting. That applies even if an employer has already taken deductions or your income was below the threshold. The SLC sends HMRC your plan type, and HMRC’s systems pre fill it and check what you enter.

The return route is most relevant for people whose income is not fully covered by payroll: sole traders and partners, landlords, people with large investment income, and workers caught by the off payroll rules, who GOV.UK says must make their student loan repayments through Self Assessment. Employees with a single job and no other income normally repay only through PAYE, as explained in our guide to student loan deductions through payroll.

What are the thresholds and rates for 2026 to 2027?

Plan or loan Annual threshold Rate on income above it
Plan 1 £26,900 9%
Plan 2 £29,385 9%
Plan 4 £33,795 9%
Plan 5 £25,000 9%
Postgraduate loan £21,000 6%

On a return, the annual threshold is used rather than the weekly or monthly figures payroll uses. Regulation 29 of the Education (Student Loans) (Repayment) Regulations 2009 sets the 9% and 6% charges, and paragraph (5A) says that where you repay a combination of Plan 1, 2, 4 or 5 loans, the lowest threshold applies. A postgraduate loan is repaid on top: GOV.UK says someone repaying both a plan loan and a postgraduate loan will be due to repay 15% of total income above the threshold, meaning 9% above the plan threshold plus 6% above £21,000.

Which income counts?

Regulation 29(4) starts with your total income at Step 1 of the Income Tax calculation in section 23 of the Income Tax Act 2007, then makes these adjustments:

  • Unearned income is excluded unless it is more than £2,000 for the year. Regulation 29(5) defines unearned income as everything other than employment, pension and social security income taxed under the Income Tax (Earnings and Pensions) Act 2003 and trading profits taxed under Part 2 of the Income Tax (Trading and Other Income) Act 2005. Savings interest, dividends and property profits are all unearned.
  • Benefits in kind are excluded. Taxable benefits such as company cars and private medical cover do not count. GOV.UK explains that from 2024 to 2025 a separate box is used for payrolled benefits so they can be taken out of the calculation.
  • Losses reduce the figure. Trade loss relief against general income or carried forward, property loss relief and employment loss relief are deducted, as is post cessation trade relief under section 96 of the Income Tax Act 2007 (see post cessation receipts and expenses).
  • Some pension relief is deducted, where it has not already been given in the Step 1 total.
  • Incapacity Benefit and Employment and Support Allowance are excluded.

The £2,000 test works as a cliff edge rather than an allowance. If your unearned income is £2,000 or less it is all left out; once it goes over, all of it counts, not just the excess. GOV.UK also says that pension income, including the State Pension, is part of the total.

How is the repayment worked out?

Illustration only. Jade is a self employed designer on Plan 2 with £30,000 profit in 2026 to 2027 and no job.

  • With £1,900 of savings interest, the interest is ignored. Income for the calculation is £30,000; £30,000 less £29,385 = £615; 9% = £55.35.
  • With £2,500 of savings interest, all of it counts. Income is £32,500; £32,500 less £29,385 = £3,115; 9% = £280.35.

An extra £600 of interest increases her student loan repayment by £225. If Jade also had a postgraduate loan, she would pay a further 6% of everything above £21,000.

When you also have a job, GOV.UK’s example is a Plan 1 borrower with £32,000 of self employed profit and a £10,000 salary: combined income of £42,000 less £26,900 gives £15,100, and 9% is £1,359 for the year, less anything already deducted from the salary. Each employer’s payroll looks only at its own pay, but the return looks at the combined total; our page on being employed and self employed at the same time covers the rest of that picture.

How are payroll deductions credited?

You enter the total plan loan deductions and postgraduate loan deductions taken through PAYE in the tax year, separately. On the paper return these are boxes 2 and 3 of the student loan section, with box 1 ticked to show repayments have started. GOV.UK warns that if you had more than one job you must add up the deductions from all your payslips, because your P60 does not show amounts taken by a previous employer. HMRC checks the figure against employer reports, and entering the wrong amount can lead to an incorrect charge.

Voluntary payments made directly to the SLC are not entered and do not reduce the amount calculated on the return. If you made overseas Direct Debit payments to the SLC, the return calculation will not include them; GOV.UK says to contact the SLC after filing so it can tell HMRC what you paid.

When is it paid, and how does it fit with payments on account?

The student loan charge is added to your Self Assessment bill. GOV.UK describes payments on account as covering tax and Class 4 National Insurance, and says the balancing payment due by 31 January also includes anything owed for student loans. In practice the full year’s repayment is usually due in one go on 31 January after the tax year ends, which is easy to forget when budgeting from your payments on account. If you are using Making Tax Digital for Income Tax, your software shows estimates during the year, but GOV.UK says these are for information only and do not reduce your balance until the final return.

What if you overpay or finish repaying?

The SLC does not give HMRC your balance, but GOV.UK says it will tell HMRC if you have repaid in full or been charged more than you owe, and HMRC will then reduce or remove the Self Assessment charge. Borrowers expecting to clear the loan soon can ask the SLC about switching to Direct Debit for the final payments. Refunds of overpaid amounts are handled by the SLC, and voluntary payments cannot be refunded.

What are the common mistakes?

  • Thinking the £2,000 unearned income rule is an allowance; once crossed, the whole amount counts.
  • Copying only the latest P60 figure when there were two jobs in the year.
  • Including payrolled company car benefit in pay without using the separate box, which inflates the repayment.
  • Changing the pre filled plan type without checking the SLC letter.
  • Leaving no cash aside because student loans are not in payments on account.
  • Forgetting that a postgraduate loan is repaid as well as, not instead of, a plan loan.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.