Each year, the government adjusts student loan repayment thresholds, affecting how much employees repay through payroll. Here, you’ll find the updated repayment thresholds and key employer obligations for the 2025/26 financial year!
New student loan thresholds for 2025/26
Starting 6 April 2025, repayment thresholds for student loans are:
- Plan 1: £24,990 annually (£2,082.50 monthly, £480.57 weekly)
- Plan 2: £27,295 annually (£2,274.58 monthly, £524.90 weekly)
- Plan 4 (Scotland): £27,660 annually (£2,305 monthly, £531.92 weekly)
- Postgraduate Loans: £21,000 annually (£1,750 monthly, £403.84 weekly)
Employees repay at a fixed rate of 9% above these thresholds, except for postgraduate loans, which are repaid at 6% above the threshold.
Payment changes
Plan 1
| Income each year before tax | Approximate monthly repayment 2025/26 | Approximate monthly repayment 2024/25 |
| £26,065 | £0 | £8 |
| £28,000 | £14 | £22 |
| £30,000 | £29 | £37 |
| £35,000 | £67 | £75 |
| £40,000 | £104 | £112 |
Plan 2
| Income each year before tax | Approximate monthly repayment 2025/26 | Approximate monthly repayment 2024/25 |
| £28,470 | £0 | £9 |
| £30,000 | £11 | £20 |
| £33,000 | £30 | £42 |
| £38,000 | £71 | £80 |
| £45,000 | £124 | £132 |
Plan 4
| Income each year before tax | Approximate monthly repayment 2025/26 | Approximate monthly repayment 2024/25 |
| £32,745 | £0 | £10 |
| £35,000 | £17 | £27 |
| £38,000 | £39 | £49 |
| £42,000 | £69 | £79 |
| £47,000 | £107 | £117 |
(Source: Cintra)
Employer responsibilities
As an employer, it’s your responsibility to make student loan deductions from your employee’s payslips. That includes:
- Identifying employees with student loans through starter checklists or HMRC notifications.
- Deducting repayments correctly from gross earnings each pay period (unless they make their own payments directly to the Student Loans Company).
- Reporting repayments to HMRC using your usual payroll submissions, like your FPS.
How to calculate student loan repayments
To calculate the amount of student finance you need to deduct from an employees pay:
- Determine the correct loan plan and corresponding threshold.
- Calculate gross earnings per pay period.
- Subtract the applicable threshold from gross earnings.
- Apply the repayment percentage (9% for Plans 1, 2, and 4; 6% for postgraduate loans).
Example calculation
If an employee on Plan 2 earns £2,800 in a month:
- Monthly threshold (Plan 2): £2,274.58
- Earnings above threshold: £2,800 – £2,274.58 = £525.42
- Repayment due: £525.42 x 9% = £47.29
Handling employees with multiple student loans
Some employees may have postgraduate loans alongside undergraduate student loans. In that case, you have to deduct both repayments separately each pay period, applying each threshold to gross pay.
Let Just Payroll Services manage student loan repayments for You
Just Payroll Services automatically updates your payroll with the latest student loan thresholds and manages all repayments for employees—keeping your payroll compliant and hassle-free.
For reliable payroll support, contact our team today.