As with any new financial year, 2024/25 has seen changes to the student loan repayment thresholds. Of the four plans currently being repaid by employees, two of them have seen an increased earnings threshold for repayments—those being plan 1 and plan 4.
Which is to be expected, since the government had previously announced that plan 2 and postgraduate loans were frozen until at least 2025!
Student loan repayment thresholds in 2024/25
The thresholds and repayment rates for each plan in 2024/25 are as follows, comparable to the 2023/24 rate:
| Plan | Annual earnings threshold 2024/25 | Annual earnings threshold 2023/24 | Rate |
|---|---|---|---|
| Plan 1 | £24,990 | £22,015 | 9% |
| Plan 2 | £27,295 | £27,295 | 9% |
| Plan 4 | £31,395 | £27,660 | 9% |
| Postgraduate | £21,000 | £21,000 | 6% |
Those on plan 1 will see a little extra in their pockets this year as the repayment threshold has risen to £24,990. The same goes to those on plan 4, with a threshold rise to £31,395. Those on plan 2 and postgraduate loans aren’t so fortunate, with their threshold set to remain frozen until 2025, so we may see some changes coming in 2025/26.
What will the threshold changes look like on a monthly basis?
Plan 1
| Income each year before tax | Approximate monthly repayment 2024/25 | Approximate monthly repayment 2023/24 |
|---|---|---|
| £24,990 | £0 | £22 |
| £26,000 | £7 | £29 |
| £28,000 | £22 | £44 |
| £30,000 | £37 | £59 |
| £35,000 | £75 | £97 |
Plan 4
| Income each year before tax | Approximate monthly repayment 2024/25 | Approximate monthly repayment 2023/24 |
|---|---|---|
| £31,395 | £0 | £32 |
| £33,000 | £12 | £40 |
| £35,000 | £27 | £55 |
| £38,000 | £49 | £77 |
| £42,000 | £79 | £107 |
Your responsibilities as the employer
Unless employees make their own direct payments to the Student Loan Company, student loan repayments are made directly by graduates’ employers when they begin earning the amount outlined above, depending on which plan they’re on (though it’s the employee’s responsibility to liaise with the Student Loans Company).
That means you’re responsible for deducting the correct amount from your employee’s pay via the PAYE system when you process their salary or wages.
Alongside making the deductions, you also have to keep a record of the deductions made, pay the deductions to HMRC, provide details within each FPS submission, and outline deductions on payslips and P60s.
What about plan 5 student loans?
Students on plan 5 student loans don’t need to start their repayments until April 2026 at the earliest, even if someone leaves their course early. So, there’s no need to worry about plan 5 deductions right now.
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Payroll Legislation Guide
The facts, figures, thresholds and allowances for 2024/25 spanning tax, National Insurance, pensions, statutory payments and more.
