04 June 2026

The Government released further guidance on the 6 April 2026 with the introduction of the new default student loan – Plan 5. 

 

The thresholds for the tax year 2026-27 are as follows:

  • Plan 1 — £26,900 annually (£2,241.66 a month or £517.30 a week) 

  • Plan 2 — £29,385 annually (£2,448.75 a month or £565.09 a week) 

  • Plan 4 — £33,795 annually (£2,816.25 a month or £649.90 a week) 

  • Plan 5 — £25,000 annually (£2,083.33 a month or £480.76 a week). 

 

Employees must repay 9% of the amount they earn over the threshold for Plan 1, 2, 4 and 5. 

Postgraduate loans — £21,000 annually (£1,750 a month or £403.84 a week). Employees must repay 6% of the amount they earn over the threshold for postgraduate loan. 

 

Starting a student loan or postgraduate loan

It is the employer’s responsibility to check with the employees whether they have a student loan in place, what the loan type is, and what plan they are on.  

There are several ways an employer may be notified that student loan deductions, postgraduate loan deductions, or both should be made. Employers should remember to check if the following apply, and ensure deductions are made from the next pay day: 

  • a new employee’s P45 shows deductions should continue. The P45 will indicate this with a ‘Y’. The Employer must ask the employee to confirm their plan or loan type, or both 

  • a new employee tells the employer they’re repaying a student loan — ask the employee to confirm their plan or loan type, or both 

  • a new employee fills in a starter checklist showing they have a student loan and/or postgraduate loan — the checklist should state which plan or loan type, or both to use. Plan type 5 has been added since April 2026 

  • HMRC sends the Employer or Agent a SL1 start notice — this will state which plan type to use

  • HMRC sends the Employer or Agent a PGL1 start notice — this will state they have a postgraduate loan 

  • the Employer or Agent receives a generic notification service (GNS) student loan or postgraduate loan, or both, reminder — ask the employee to confirm their plan or loan type, or both.

 

Student Loan notifications may be sent via the post, or to the Employers RTI mailbox on their payroll software. Employers and Agents can also find this information by logging into their HMRC online services account or their Agent Online Services Account (AOSA). The way notifications are received can be modified by logging into this account online and changing the contact preferences. It is good practice to check for new notifications each time a payroll is processed, to ensure compliancy. 

If an employee does not know which plan or loan they’re on, they are able to check which repayment plan they are on. If an employee is still unable to say, employers must use Plan 5 until the employer or Agent receives a student loan start notice (SL1). Defaulting to Plan 5 is only available for Plan 1, Plan 2 or Plan 4 loans. 

 

 


Information provided in this news article may be subject to change. Please make note of the date of publication to ensure that you are viewing up to date information. 

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