UK payroll guide · 2026/27
How student loans change your take-home pay
Student loan deductions are based on eligible earnings above your plan threshold. They do not apply to your entire salary, and different loan plans can produce different take-home amounts from the same gross pay.
One gross salary · five repayment plans
£40,000 annually
The example uses the same 2026/27 TaxDecod calculation for every row: England/Wales/Northern Ireland Income Tax, standard 1257L Personal Allowance, employee National Insurance and no pension. Only the student-loan selection changes.
What changes with each plan?
| Plan | Annual threshold | Rate above threshold | Monthly loan deduction | Est. monthly net |
|---|---|---|---|---|
| No student loan | — | — | £0 | £2,693 |
| Plan 1 | £26,900 | 9% | £98 | £2,595 |
| Plan 2 | £29,385 | 9% | £80 | £2,614 |
| Plan 4 | £33,795 | 9% | £47 | £2,647 |
| Plan 5 | £25,000 | 9% | £113 | £2,581 |
| Postgraduate loan | £21,000 | 6% | £95 | £2,598 |
With no loan, this example gives £2,693 monthly take-home. The repayment amounts are annualised illustrations divided by 12; payroll calculates per pay period and can round differently. If you repay more than one loan type, a single-plan estimate does not capture their combined deductions.
How to calculate the deduction
For a standard annualised example, subtract your plan's annual threshold from eligible annual earnings, take the greater of that difference or zero, then apply 9% for Plans 1, 2, 4 or 5, or 6% for a postgraduate loan. An employee earning below their threshold has no repayment for that plan under these assumptions.
Loan deductions are not the same as Income Tax. Income Tax and employee National Insurance still have to be calculated under their own rules. A salary-sacrifice arrangement may change eligible pay, while other types of pension contributions may not have the same effect; check your employer's scheme.
Plan 4 usually relates to qualifying Scottish student loans; that does not mean you can assume Scottish Income Tax applies based only on which loan plan you hold. Set tax region and loan plan independently to match your circumstances.
Use your own payslip details
- Find your repayment plan from your Student Loans Company account or payslip, not from a guess based on age.
- Check whether your payslip shows pension salary sacrifice or a different pension contribution method.
- Compare the correct plan's deduction with your actual pay frequency and taxable earnings. A bonus or irregular hours can change an individual payslip.
- If the plan shown by payroll is incorrect, use the official government repayment guidance to check who to contact.
Sources and scope
TaxDecod is an independent annualised estimator, not HMRC or the Student Loans Company. Thresholds are sourced from official employer guidance for 2026/27; scenario net pay comes from TaxDecod's salary engine. Reviewed 23 September 2026.