Last updated: 14 October 2026
How are student loan repayments calculated on your tax return?
If you file Self Assessment and have a student loan, HMRC works out your repayment on your total income for the year, not just your salary. You repay 9% of income above your plan’s threshold (6% for a Postgraduate Loan), minus anything already deducted through payroll. Income counted includes self-employed profits, rental profits, and savings, dividend and other unearned income if that unearned income is over £2,000 in the year.
2026/27 thresholds
| Plan | Annual threshold | Rate |
| 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% |
What counts as income
- Employment income and benefits in kind
- Self-employed profits
- Rental profits
- Savings interest, dividends and other unearned income, but only if the total of these is over £2,000
How the calculation works
- Total your income for student loan purposes
2. Deduct the threshold for your plan
3. Multiply by 9% (or 6% for a Postgraduate Loan)
4. Deduct amounts already taken by your employer
5. The balance is added to your tax bill and due by 31 January
Student loan repayments aren’t included in payments on account.
Example
Ella has a Plan 2 loan. In 2026/27 she earns £24,000 from her job and £14,000 profit from freelance design. Her total income is £38,000. She owes 9% of £8,615 (£38,000 minus £29,385), which is £775. Her employer took nothing, as her salary is below the threshold. So £775 is added to her Self Assessment bill for January 2028.
Two plans
If you have Plan 1 and Plan 2, you repay 9% above the lower threshold, split between the loans. A Postgraduate Loan is repaid alongside any undergraduate loan, at 6% above £21,000.
Common mistakes
- Not ticking the student loan box when HMRC has sent a notice
- Ticking it after the loan has been repaid
- Entering the wrong plan type
- Forgetting payroll deductions shown on the P60
Overpayments
If too much is collected through Self Assessment and payroll combined, SLC refunds it once the year is reconciled. If your loan is repaid during the year, tell SLC so deductions stop.
Planning for the bill
Because the repayment is collected in one go on 31 January, it can come as a surprise to freelancers and landlords. Set aside 9% of any income above your threshold as you earn it. If your income falls, the repayment falls too, and if your income is below the threshold for the whole year, nothing is due through your return.
Employed and self-employed in the same year
Your employer deducts repayments from each payslip based on your pay in that period. Your return then looks at your total income for the year. If your pay goes above the threshold in some months only, for example because of overtime, you may have paid even though your annual income was below the threshold. SLC can refund this.
Interest
Interest on Plan 2 loans ranges from 4.1% to 6%, depending on income, and Plan 1, 4 and 5 loans are charged 4.1% at present.
Frequently asked questions
Does unearned income under £2,000 count?
No.
Is the repayment tax-deductible?
No, it’s paid from taxed income.
Can I make voluntary repayments?
Yes, directly to SLC.
What if I’m abroad?
You repay SLC directly, not through Self Assessment.
Related: getting student loan records corrected, the student loan balancing payment error and freelance income while employed.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with Self Assessment and student loans. See our small business accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
