There’s a lot happening with student loan repayment thresholds in 2026/27. Annual thresholds are rising across plan 1, plan 2, and plan 4—and for the first time, plan 5 repayments are kicking in from April 2026. That means payroll teams across the UK need to be across more plan types than ever before.
Let’s walk through what’s changing, what the new thresholds look like, and what you’ll need to do as an employer to stay on top of it all.
Student loan repayment thresholds in 2026/27
HMRC has confirmed the repayment thresholds for 2026/27. Here’s how they compare to last year:
| Plan | Annual earnings threshold 2026/27 | Annual earnings threshold 2025/26 | Repayment rate |
|---|---|---|---|
| Plan 1 | £26,900 | £26,065 | 9% |
| Plan 2 | £29,385 | £28,470 | 9% |
| Plan 4 | £33,795 | £32,745 | 9% |
| Plan 5 | £25,000 | N/A (new) | 9% |
| Postgraduate | £21,000 | £21,000 | 6% |
It’s good news for employees on plans 1, 2, and 4. They’ll all see a slight increase to their threshold, meaning a small reduction in monthly deductions at lower salary levels. The postgraduate loan threshold stays frozen at £21,000 for another year.
Worth knowing, though: in the November 2025 Budget, the government confirmed that the plan 2 threshold will be frozen at £29,385 from April 2027 until April 2030. So, while this year brings a rise, plan 2 borrowers won’t see another increase for a while after that—and as wages grow over time, more of their income will gradually fall above the threshold.
What will the threshold changes look like on a monthly basis?
Plan 1
| Income each year before tax | Approximate monthly repayment 2026/27 | Approximate monthly repayment 2025/26 |
|---|---|---|
| £26,900 | £0 | £6 |
| £28,000 | £8 | £14 |
| £30,000 | £23 | £29 |
| £35,000 | £61 | £67 |
| £40,000 | £98 | £104 |
| £50,000 | £173 | £179 |
| £60,000 | £248 | £254 |
Plan 2
| Income each year before tax | Approximate monthly repayment 2026/27 | Approximate monthly repayment 2025/26 |
|---|---|---|
| £29,385 | £0 | £7 |
| £30,000 | £5 | £11 |
| £33,000 | £27 | £34 |
| £38,000 | £65 | £71 |
| £45,000 | £117 | £124 |
| £50,000 | £154 | £161 |
| £60,000 | £229 | £236 |
Plan 4
| Income each year before tax | Approximate monthly repayment 2026/27 | Approximate monthly repayment 2025/26 |
|---|---|---|
| £33,795 | £0 | £8 |
| £35,000 | £9 | £17 |
| £38,000 | £32 | £39 |
| £42,000 | £62 | £69 |
| £47,000 | £99 | £107 |
| £50,000 | £122 | £129 |
| £60,000 | £197 | £204 |
Plan 5 (new from April 2026)
| Income each year before tax | Approximate monthly repayment 2026/27 |
|---|---|
| £25,000 | £0 |
| £27,000 | £15 |
| £30,000 | £37 |
| £35,000 | £75 |
| £40,000 | £112 |
| £50,000 | £187 |
| £60,000 | £262 |
The big news: plan 5 repayments begin
This is the headline change for 2026/27. Plan 5 student loan applies to students in England who started their course on or after 1 August 2023, and April 2026 is when their repayments begin for the first time.
The plan 5 student loan repayment threshold sits at £25,000—the lowest of any undergraduate plan—though it comes with a more favourable interest rate (based on RPI only, with no additional percentage on top). The trade-off is a longer write-off period of 40 years, compared to 30 under plan 2.
From April 2026, HMRC will start issuing SL1 start notices to employers for plan 5 borrowers. If you have employees on plan 5, make sure they’re set up correctly in your payroll—incorrect setup could mean under- or over-deductions, which isn’t great for anyone.
A practical tip: where an employee is on more than one plan, always start deductions using the plan with the lowest repayment threshold first.
An employer's role in student loan deductions
Unless your employees are making repayments directly to the Student Loans Company (SLC), it’s your responsibility to deduct them through PAYE. The process itself is usually straightforward, your payroll software should calculate the correct amount each pay period, but it’s worth staying on top of a few things:
- New starter checklists: Make sure every new joiner accurately declares which loan plans they’re on. With plan 5 now active, there are more options than before.
- HMRC start notices: These tell you when to start deductions and which plan to use. Keep an eye out for SL1 notices for plan 5 borrowers coming through for the first time this year.
- Record keeping: You’ll need to keep a record of all deductions made, report them within each FPS (Full Payment Submission), pay them across to HMRC, and show them clearly on payslips and P60s.
- Multiple plans: Some employees may now have both an undergraduate and a postgraduate loan running at the same time—meaning deductions on two different plans simultaneously.
One thing a lot of teams don’t always account for: repayments are calculated per pay period, not annually. So, if an employee’s earnings fluctuate—due to overtime, bonuses, or irregular hours—their deductions will vary from month to month too. That’s worth bearing in mind when employees ask questions about their payslip.
Need a hand with student loan deductions?
With plan 5 now live and thresholds shifting across the board, 2026/27 is a good time to make sure your payroll setup is doing the heavy lifting for you.
Cintra’s payroll solutions are already up to date with the latest rates and thresholds—so there’s no need to run manual calculations or worry about keeping track of every change yourself.
If you’d like to see how Cintra handles student loan deductions (and everything else) automatically, get in touch and we’d be happy to walk you through it.
Payroll Legislation Guide
The facts, figures, thresholds and allowances for 2026/27 spanning tax, National Insurance, pensions, statutory payments and more.
