How repayments leave your payslip
Figures as of · See it on your take-home pay
The rate, per plan
Once your pay in a period is above your plan's threshold, your employer deducts a fixed percentage of everything above it — not the whole amount, just the slice over the line:
- Plan 1: 9% of income above £26,900
- Plan 2: 9% of income above £29,385
- Plan 4: 9% of income above £33,795
- Plan 5: 9% of income above £25,000
- Postgraduate Loan: 6% of income above £21,000
One month, worked through
Take a Plan 2 borrower paid £2,800 that month. A twelfth of the annual threshold works out to roughly £2,449 for the period. Above that, 9% is deducted on the difference — about £32 for this particular month, on top of income tax, National Insurance and any pension contribution.
How your employer knows to start
When you start a job, you declare your plan type on the starter checklist, or your P45 tells the new employer to keep deducting; HMRC can also send the employer a start notice directly. Either way, payroll software applies the right threshold and rate automatically from your first payslip once it's above the line — there's no separate form to fill in for the deduction itself to begin.
Calculated per payslip, not per year
PAYE checks each pay period against a slice of the annual threshold — roughly a twelfth of it if you're paid monthly, a week's worth if you're paid weekly. That means a single bonus or overtime-heavy month can trigger a repayment even in a year where your regular salary alone wouldn't have crossed the threshold. HMRC doesn't correct this automatically within the tax year — the deduction simply reflects whatever that period's pay was.
The deduction still comes off your balance, so it isn't lost — but if your total income for the tax year ends up below the annual threshold, you can ask the Student Loans Company for that year's deductions back once the year has closed. It isn't refunded automatically, and for a balance heading for write-off an unclaimed over-deduction is simply money paid for nothing.
Self-employed: repaid through self-assessment
If you're self-employed, there's no employer running PAYE, so there's nothing to deduct from a payslip. Instead, your repayment is calculated once a year on your self-assessment tax return, using the same threshold and rate as above but applied to your full year's income at once, and paid alongside your income tax bill.
If you're both employed and self-employed in the same year, both routes apply — PAYE deductions from the employed income, plus a self-assessment calculation that accounts for your total income and credits what's already been deducted.
Moving overseas
PAYE only works because a UK employer is running payroll. Move abroad and that mechanism disappears, so you're required to tell the Student Loans Company yourself. From there, the SLC bills you a fixed monthly amount directly, worked out from the income you declare against a threshold set for the country you live in — the thresholds differ by country, and if you don't send income evidence a default monthly amount applies.
Two loans at once
Postgraduate loans run alongside an undergraduate plan (Plan 1, 2, 4 or 5) rather than replacing it. Both are deducted in the same pay period, each against its own threshold and at its own rate, so a borrower with both can see two separate deductions on one payslip.
When pay dips below the threshold
If a particular period's pay falls back under the threshold — unpaid leave, a quiet month for variable pay, a spell of reduced hours — that period's deduction simply doesn't happen. Nothing is carried forward: PAYE just looks at each period on its own terms. What doesn't pause is interest — it keeps being added to the balance every day regardless of whether a repayment landed that month. See how the interest itself compounds for what that means for the balance during a quiet spell.
What moves the number
The rate and the threshold are fixed, so the only lever is gross pay itself: a salary sacrifice arrangement lowers the figure payroll deducts from, the same way it lowers tax and National Insurance. Checking a payslip against the take-home pay calculator also catches an employer applying the wrong plan or threshold.
See your own deduction
The take-home pay calculator shows the student loan line next to income tax and National Insurance, so you can see exactly what leaves your pay each month. For the interest side of the loan rather than the repayment side, see how student loan interest works.