Student Loan Repayments Through Self Assessment for the Self-Employed
How self-employed people repay student loans through Self Assessment. Plan 1, 2, 4, 5 thresholds, rates, and worked examples for sole traders.
Key Actions
- Check which student loan plan you're on using your Student Loans Company account
- Include your student loan on your Self Assessment tax return
- Budget for student loan repayments alongside your tax bill
- Claim credit for any PAYE student loan deductions already taken by an employer
- Check your loan balance annually to avoid overpaying after it's cleared
If you're self-employed and have a student loan, your repayments aren't taken automatically from your pay like they would be in a PAYE job. Instead, HMRC calculates what you owe based on your Self Assessment tax return, and you pay it alongside your income tax and National Insurance.
This guide explains which plan you're on, how much you'll repay, and how the process works when you're a sole trader. If you haven't filed before, start with our guide on filing your first tax return.
Which Student Loan Plan Are You On?
There are five student loan repayment plans in the UK — Plan 1, Plan 2, Plan 4, Plan 5, and Postgraduate — each with different income thresholds. Your repayment plan depends on when and where you started your course. If you're unsure, check your Student Loans Company (SLC) online account or look at a recent statement.
| Plan | Who it applies to | Repayment rate |
|---|---|---|
| Plan 1 | English and Welsh students who started before 1 September 2012, and Northern Irish students | 9% |
| Plan 2 | English and Welsh students who started between 1 September 2012 and 31 July 2023 | 9% |
| Plan 4 | Scottish students | 9% |
| Plan 5 | English and Welsh students who started from 1 August 2023 onwards | 9% |
| Postgraduate Loan | Master's (from August 2016) or Doctoral (from August 2018) loans | 6% |
You only repay a percentage of income above your plan's threshold — not on your entire income. If you earn below the threshold, you repay nothing that year.
Student Loan Repayment Thresholds for 2025/26 and 2026/27
The threshold is the annual income level above which repayments are calculated. These change each tax year:
| Plan | 2025/26 threshold | 2026/27 threshold |
|---|---|---|
| Plan 1 | £26,065 | £26,900 |
| Plan 2 | £28,470 | £29,385 |
| Plan 4 | £31,395 | £33,795 |
| Plan 5 | £25,000 | £25,000 |
| Postgraduate | £21,000 | £21,000 |
For self-employed people, the income figure used is your net profit from self-employment (turnover minus allowable expenses), plus any other taxable income such as employment, savings interest, or rental income.
How Student Loan Repayments Work Through Self Assessment
Student loan repayments through Self Assessment are calculated by HMRC based on your tax return, and paid as a lump sum alongside your income tax bill. The process works like this:
- You complete your Self Assessment tax return for the tax year (e.g., 2025/26)
- On the return, you declare which student loan plan you're on
- HMRC calculates your repayment based on your total income minus the threshold
- The repayment amount is added to your Self Assessment bill
- You pay it by 31 January following the end of the tax year — the same deadline as your income tax
Student loan repayments through Self Assessment are not subject to payments on account. Unlike income tax, where you may need to make advance payments in January and July, student loan repayments are calculated and paid in full once your return is processed.
Worked Example: Student Loan Repayment Calculation for Self-Employed
Sarah is a freelance graphic designer. Her taxable profit for the 2025/26 tax year is £38,000. She has a Plan 2 student loan.
Student loan calculation:
- Taxable profit: £38,000
- Plan 2 threshold (2025/26): £28,470
- Income above threshold: £38,000 − £28,470 = £9,530
- Repayment rate: 9%
- Student loan repayment: £9,530 × 9% = £857.70
Sarah pays this £857.70 alongside her income tax and National Insurance bill by 31 January 2027.
For comparison, here's what James would pay on different plans with the same £38,000 profit:
| Plan | Threshold (2025/26) | Income above threshold | Rate | Annual repayment |
|---|---|---|---|---|
| Plan 1 | £26,065 | £11,935 | 9% | £1,074.15 |
| Plan 2 | £28,470 | £9,530 | 9% | £857.70 |
| Plan 4 | £31,395 | £6,605 | 9% | £594.45 |
| Plan 5 | £25,000 | £13,000 | 9% | £1,170.00 |
| Postgraduate | £21,000 | £17,000 | 6% | £1,020.00 |
If you have both an undergraduate and a Postgraduate Loan, repayments are calculated separately and you pay both.
Student Loan Repayments With Both PAYE and Self-Employment Income
If you earn income from a PAYE job alongside your self-employment, your employer will already be deducting student loan repayments from your salary. When you file your Self Assessment return, HMRC looks at your combined total income from all sources.
Here's how it works:
- HMRC calculates the total student loan repayment due on your combined income
- It then subtracts any repayments your employer has already deducted through PAYE
- You pay the remaining balance through Self Assessment
Example: James earns £20,000 from a part-time employed job and £22,000 profit from self-employment. His combined income is £42,000. On a Plan 2 loan, his total annual repayment would be 9% of (£42,000 − £28,470) = £1,217.70. If his employer already deducted £600 through PAYE, he pays the remaining £617.70 through Self Assessment.
Budgeting for Student Loan Repayments as Self-Employed
Student loan repayments are an extra cost on top of income tax and National Insurance that catches some self-employed people off guard. To avoid a surprise bill:
- Calculate your expected repayment when you budget for your tax bill — add 9% (or 6% for Postgraduate) of income above your threshold
- Set money aside monthly — divide your estimated annual repayment by 12 and transfer it to a savings account
- Check your loan balance with the Student Loans Company before each tax year — if your balance is low, you may want to contact SLC to avoid overpaying
How to Avoid Overpaying Your Student Loan Through Self Assessment
Student loan overpayment happens when HMRC calculates your repayment based on your income rather than your remaining loan balance. If your calculated repayment for the year exceeds what you actually owe, you could overpay.
To prevent this:
- Check your loan balance through your SLC online account
- If your remaining balance is less than your expected annual repayment, contact SLC before the payment deadline
- If you do overpay, SLC will refund the difference — but it can take several months
This is particularly relevant for self-employed people because the lump-sum nature of Self Assessment payments makes overpayment more likely than it is with monthly PAYE deductions.
Common Student Loan Mistakes on Self Assessment Tax Returns
When filling in your Self Assessment return, watch out for these student loan pitfalls:
- Not declaring your loan at all — if you skip this section, HMRC may not calculate your repayment and SLC will chase you later
- Selecting the wrong plan type — this changes your threshold, so double-check with SLC
- Forgetting to claim PAYE credits — if an employer has already deducted student loan repayments, make sure these appear on your return so you don't pay twice
- Not including all income sources — your combined income from employment, self-employment, and other sources determines the repayment
Our guide on common Self Assessment mistakes covers other errors to avoid when filing.
Frequently Asked Questions
Do student loan repayments count as an allowable expense?
No. Student loan repayments are a personal obligation, not a business expense. You cannot deduct them from your self-employment income when calculating your taxable profit.
What happens if I earn below the repayment threshold?
You repay nothing for that tax year. There's no minimum repayment for the self-employed. If your net profit plus any other income falls below your plan's threshold, no student loan charge appears on your Self Assessment bill.
Are student loan repayments included in payments on account?
No. Payments on account cover income tax and Class 4 National Insurance only. Student loan repayments are calculated after you file your return and are paid in full by 31 January — they are not split across the January and July payment dates.
Can I make voluntary overpayments to clear my loan faster?
Yes. You can make extra payments directly to the Student Loans Company at any time. These are separate from your Self Assessment repayments. Contact SLC or pay through your online account. Consider whether this makes financial sense — student loans are written off after 25 to 40 years depending on your plan (25 years for Plan 1, 30 years for Plans 2 and 4, 40 years for Plan 5), and interest rates may be lower than other debts.
This guide is for informational purposes only and does not constitute tax, legal, or financial advice. Tax rules change frequently. Always verify current requirements on GOV.UK or consult a qualified accountant for your specific situation.
Official Sources
- Repaying your student loan — GOV.UK
- Repaying through Self Assessment — GOV.UK
- Student loans: terms and conditions 2026 to 2027 — GOV.UK
- When your student loan gets written off — GOV.UK
- Sign in to manage your student loan balance — GOV.UK