Student Loan Deductions

Student loan deductions are repayments of your student loan that your employer collects automatically from your salary and sends to HMRC. The HMRC will then send this money to the Student Loan Company. This is all done through PAYE, so the repayments are made from your salary before your earnings ever reach you.

How HMRC calculates your student loan deductions

How much you pay is based on your Student Loan Plan, which in turn is based on when you studied and how much you earn:

  • Student Loan Plan 1 (SLP1): you’ll have this if you were living in Scotland or Northern Ireland when you started your course, or if you were living in England or Wales and started your course before September 2012. You’ll pay 9% of what you’re earning above the threshold (£20,195 in 2023/24).
  • Student Loan Plan 2 (SLP2): you’ll have this plan if you were living in England or Wales when you started your course, and if you started it after September 2012. You’ll pay 6% of what you’re earning above the threshold (£27,295 in 2023/24).
  • Postgraduate Loan (PGL): you’ll pay 6% of your earnings above the threshold (£21,000).
  • Mortgage Style Loan (MGL): this is an older kind of loan – you only have this if you started studying before September 1998. MGLs are more similar to traditional loans.

When do student loan deductions start and stop?

  • The earliest you’ll have to start repaying your student loan is 6th of April of the tax year after you graduate – and, of course, once you’ve started earning above the thresholds we just mentioned
  • Once you’ve finished paying your loan, HMRC will tell your employer, who’ll then stop your deductions
  • Most student loans (with the exception of MGLs) are completely written off 30 years after you started repaying them

What if you’re not on PAYE?

  • If you’re self-employed: you’ll pay your student loans through your Self Assessment tax return
  • If you’re overseas for three months or more: you’ll need to tell the Student Loan Company

Frequently Asked Questions

  • Can you help me to maintain my own accounting records?

    Of course! We advise that you start a comprehensive spreadsheet to keep track of your taxable income and relevant expenses throughout the year in order to make your tax return more straightforward. This can be done on an Excel spreadsheet or Google sheet to keep things simple! Contact our team for more advice today!

  • How easy is it to change my accountant?

    We know that you have plenty to consider when you run a business, so we keep things easy for you. If you are interested in learning more about our services, simply leave us a message via our online contact form and a member of our accounting team will contact you to explain everything you need to know.

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