I have to fill in a tax return. How do Self Assessment Plan 1 student loan repayments work?
Not everyone has to fill in a tax return each year. Common examples of when you are likely to need to fill in one are: if you are self-employed, pay higher rates of tax, or have some other source of income which is not taxed before you receive it – for example, you rent out a property.
⚠️ This page is for those with Plan 1 income-contingent (income-based) student loans. There are separate pages for Plan 2 student loans, postgraduate loans and Plan 4 student loans. You should contact the Student Loans Company (SLC) if you are unsure which type of loan you have.
If you have gone to work abroad and are not in the UK tax system, you will need to make a payment arrangement direct with the SLC.
Do I have to fill in a tax return just because I have a Plan 1 student loan?
No, having a student loan is not in itself a reason for needing to complete a tax return. You usually only have to complete one if it is needed for your taxes and HMRC ask you to do so (or you notify them that you have a tax reason for needing one). You can read who is required to complete a tax return on our page: Do I need to complete a tax return?.
If you are required to complete a tax return, the form and the calculation also take into account your student loan repayments.
How are Plan 1 student loan repayments calculated under Self Assessment?
In very basic terms, Plan 1 student loan repayments are due at a rate of 9%:
- on your earnings over £22,015 a year (from 6 April 2023 to 5 April 2024; for 2022/23 the threshold was £20,195), whether from employment or self-employment
- on other income over £2,000 a year if you are required to fill in a tax return under Self Assessment and your total income is above the repayment threshold of £22,015
Previously, we gave the example of Katrina having two jobs, in neither of which she earned over the £22,015 threshold. If she were required to complete a tax return, for example because she also does some self-employed work, then her student loan repayments would be calculated accordingly.
Example: Katrina, continued (1)
Katrina has a Plan 1 income-based student loan. She works part-time at Company A earning £13,500 a year. As she is not earning above the threshold, she does not have to make repayments.
In April 2023, she gets another part-time job for Company B, earning £10,000 a year. Note: Company B is not in any way related to Company A.
Even though her total earnings are now £23,500 a year, neither employer has to deduct student loan repayments because each employment is within the £22,015 threshold.
But Katrina has to file a tax return for 2023/24 as she has also £2,000 of profits from freelance work (assuming Katrina has already deducted the trading allowance when calculating her profits of £2,000). Her total earnings add up to £25,500 – that is £13,500 from Company A + £10,000 from Company B and £2,000 profits from her freelance work.
This is £3,485 above the £22,015 student loan repayment threshold, so she has to pay 9% x £3,485, £313.65, in student loan repayments through her Self Assessment.
How does ‘unearned income’ affect Plan 1 repayments?
If you have to fill in a tax return and you get more than £2,000 a year in 'unearned' income, this affects how much you have to repay if your total income, including the unearned income, is above the annual repayment threshold (£22,015 in 2023/24). Unearned income includes, for example, interest from savings (this is not reduced by the personal savings allowance) or profits from letting out a property (after taking account of the property allowance).
Importantly, the £2,000 is ‘all or nothing’. This means that if you get any unearned income of up to £2,000 a year, it is not taken into account at all; but as soon as you go over £2,000, the whole amount is taken into account.
Let’s carry on with our example from the previous section above:
Example: Katrina continued (2)
Katrina, who has a Plan 1 income-based student loan, also has exactly £2,000 interest from her deposit in a savings account. Please note the personal savings allowance does not reduce the unearned income when calculating student loan repayments.
- In her Self Assessment, none of this is taken into account in calculating her student loan repayments. As in the example in the section above (Katrina continued,1), her 2023/24 loan repayment is still £313.65.
But what happens if Katrina finds she has accrued an extra £1 of interest on her current account in 2023/24?
- In her Self Assessment, the whole £2,001 of unearned income is taken into account in calculating her student loan repayments. So now she will pay an extra 9% x £2,001: £180.09.
When added to the £313.65 above, this makes her total 2023/24 student loan repayment £493.74.
What information about my Plan 1 student loan do I need to fill in my tax return?
When filling in your tax return, you will need to include the total of any student loan repayments you have already made under Pay As You Earn (PAYE). If you are using HMRC online services to fill in your tax return, then information on your student loan repayments may be pre-populated on your tax return automatically. Check that this information is correct with your own records and if it is not then you can change the pre-populated figures. Your tax return will then be processed with your figures which HMRC will subsequently check, so you should explain why you have entered different loan repayment amounts to HMRC in the additional information box on your return.
Also, although HMRC usually get their information from HM Revenue & Customs (HMRC), you might sometimes need to inform the Student Loans Company (SLC) direct of PAYE repayments you have made, for example, if there is a delay in passing information from HMRC to the SLC.
Please note that student loan repayments are not tax-deductible expenses on your Self Assessment tax return.
⚠️ We would recommend you always keep your payslips.
If you have a single job in a tax year, your form P60 from your employer at the end of the year will show how much has been deducted in repayments.
But if you move from one job to another, the form P45 your old employer gives you does not show the total deductions made in that employment. Your old employer will only have ticked a box on the form P45 to indicate to your new employer that student loan repayments should continue being collected.
When you get to the end of the tax year, you will need to work out from the payslips from your old job how much your former employer deducted and add that figure to the amount shown on the form P60 from your new employer.
Again, let’s illustrate this with an example.
Dave does some freelance designing websites, so he needs to fill in a tax return each year. But he also works part-time for an employer – he changes job in August 2023.
His old employer deducted Plan 1 student loan repayments as follows:
- April 2023: repayment of £25
- May 2023: repayment of £22
- June 2023: repayment of £22
- July 2023: repayment of £26
In May 2024, his new employer gives him his form P60 for the tax year 2023/24 showing total student loan repayments of £213, but this figure does not include the amounts above from Dave’s old job.
When Dave completes his 2023/24 tax return, he has to add together the amounts deducted at both employments to find the total deductions to put on the form.
The total is £308 which is £25 + £22 + £22 + £26 + £213.
The £308 deducted comes off the total student loan repayment he owes for the year.
If Dave had not kept his payslips, he should be able to contact his old employer to ask for the information. However, it is better to keep the information in the first place to avoid having to track it down later. He might also have problems getting hold of the details if, for example, his old employer had gone out of business.
There is information on GOV.UK on how to complete the student loan questions on paper and online Self Assessment tax returns.
On what date are Plan 1 student loan repayments due under Self Assessment?
Under Self Assessment, your student loan repayments are due on 31 January following the end of the tax year. So, for the tax year ended 5 April 2023, your payment will be due on 31 January 2024.
Student loan repayments are not part of any payments on account you are due to make under Self Assessment, nor do you need to take them into account if you are working out whether you can claim to reduce your payments on account.
Student loan repayments under Self Assessment are included with your overall tax and National Insurance contributions (NIC) bill. So if you are late paying, for example, you will face the same penalty for your student loan repayment as the rest of your bill. On our page What if I cannot pay my tax bill?, we provide some guidance on what to do if you are having difficulty paying.
Are any Plan 1 repayments I have made direct to the SLC taken off my Self Assessment bill?
No. You can make voluntary repayments direct to the SLC at any time. But if you do so, these payments will not reduce the amount that you have to pay under Self Assessment and should not be included on your tax return.
If you have made repayments direct to the SLC because you have been working abroad and then complete a Self Assessment return, HM Revenue & Customs (HMRC) will calculate your loan repayments without considering any direct repayments. We cover what you can do on our page: What happens to my student loan if I go abroad?
If, however, you are employed and repayments have been deducted under Pay As You Earn (PAYE) by your employer, these do come off the amount due under Self Assessment.
However, in certain circumstances a situation may arise in that between the end of the last year and submitting your Self Assessment tax return you may have moved to repaying your loan directly to the SLC and have subsequently fully repaid your loan. If this is the case your Self Assessment tax calculation may generate a student loan underpayment based on your income taxed through the Self Assessment system. If this happens and you have no further loan balance to repay it would be advisable to not include information on the student loan repayments section of the Self Assessment tax return and explain in the additional information section that you have fully repaid your loan between the start of the tax year (6 April) and the date of submitting your tax return.
An example may help:
Jon is in Self Assessment because he is self-employed. He starts repaying his student loan by direct debit from May 2023 as he is close to finally paying off the loan and, in fact, fully repays the loan by October 2023.
When he completes his tax return for the tax year 2022/23 close to 31 January 2024 (the due date for online filing), he finds that the online calculation still calculates that he is due to pay student loan repayments. In these circumstances he can amend his tax return to remove the entries relating to student loan repayments and explain in the additional information box that he has now fully repaid his student loan.
My tax return says I have to pay back more on my Plan 1 student loan than I still owe. What do I do?
If you are in the situation where you think the amount due under the Self Assessment calculation is too much – that is, you will then be owed money by the Student Loans Company (SLC), you can contact HM Revenue & Customs (HMRC) to apply for an informal ‘stand over’. This would allow you to pay a smaller amount in the meantime until the position is resolved.
If you do overpay your student loan through Self Assessment, then the overpayment will be allocated against any other outstanding amounts due such as income tax or National Insurance contributions. If there are no outstanding liabilities, then you can request the overpayment to be repaid.
How does budgeting for my Self Assessment tax affect Plan 1 student loan repayments?
One facility HM Revenue & Customs (HMRC) offer for payment of all Self Assessment liabilities, including student loan repayments, is a regular direct debit known as a Budget Payment Plan (BPP) or ‘pay weekly or monthly'. This allows you to make regular payments, subject to certain conditions.
For student loan borrowers repaying through Self Assessment, there is, however, a possible disincentive to taking up a BPP. As the effective date of repayment is treated as 31 January following the end of the tax year, your interest will still be clocking up on the outstanding student loan balance even though HMRC have your money early.
Chas has a Plan 1 student loan and lives in England. He started a new business in 2023/24 and his taxable profits were £23,500, so his tax bill for the year was £2,186. In addition, he had £983.70.60 Class 4 National Insurance contributions (NIC) to pay and Class 2 NIC of £179.40. His Plan 1 student loan repayment was a further £133.65.
On top of that, he has to make payments on account (POAs), for 2024/25 of half of his tax and Class 4 NIC liability for 2023/24 on 31 January and 31 July 2025. Payments on account are not due on Class 2 NIC or the student loan repayment.
The amounts he has to pay come as a bit of a shock to Chas, so he decides to start paying towards the amount he owes on 31 January 2025 by entering into a direct debit BPP with HMRC. Luckily he did his tax return early and his plan was set up in May 2024, allowing him nine months to spread the payment at £563 a month. Of this, £15 a month is his student loan repayment.
Let us look at his total payments in the table below:
|Class 2 NIC||Student
|31 January 2025|
|Balance for 2023/24||2,186||983.70||179.40||133.65||3,482.75|
|1st POA for 2024/25: half of 2023/24 tax and
Class 4 NIC liability
|Split over nine months (May 2024 to Jan 2025)||364||164||20||15||563|
|31 July 2025|
|2nd POA for 2024/25: half of 2023/24 tax and
By paying in instalments under the BPP, his ‘tax’ bill is therefore cleared by 31 January 2025 and he can go on making regular payments towards his July payment on account if he wishes. HMRC do not give him interest even though he has paid early, but equally none is charged.
But when Chas gets his student loan statement, he will see that the £133.65 he has repaid is only taken off his loan balance at 31 January 2025, even though he parted with the money in instalments over the course of the preceding nine months. Interest is added to the student loan balance at the prevailing rate taking no account of the fact that he had paid the amount due.
So, what could Chas have done instead? Well, he might have considered putting his tax money aside in a separate interest-bearing bank account (perhaps using a cash Individual Savings Account (ISA), subject to certain limits, on which the interest is tax free) and paying the balance in full on 31 January. But this does mean he would have to resist the temptation to draw on the funds in the meantime.
Unfortunately, Chas cannot instead pay the £15 a month student loan repayment straight to the SLC as he is not in the last 23 months of repaying his loan. If he were to do so, these would be treated as extra payments and he would then find an unwelcome surprise – that he still has to pay the £133.65 due under Self Assessment on 31 January 2025 anyway.