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From 6 January 2024, the main rate of class 1 National Insurance contributions (NIC) deducted from employees’ wages is reduced from 12% to 10%. From 6 April 2024, the main rate of self-employed class 4 NIC will reduce from 9% to 8% and class 2 NIC will no longer be due. Those with profits below £6,725 a year can continue to pay class 2 NIC to keep their entitlement to certain state benefits. Our guidance will be updated in full in spring 2024.

Updated on 6 April 2023

Student finance and the tax system

This section looks at how the tax system interacts with applying for and repaying student loans. When applying for student finance, you may need to provide details about your and your family’s taxable income. After leaving your course, you may repay your student loans through the tax system whether you are employed or pay tax through self assessment. 

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Student loans

Student loans are borrowings from the UK government to help you live and pay your course fees. You usually pay them back when you leave or finish your studies.

How much you can borrow depends on your personal circumstances, but we do not cover that aspect of student loans. If you are wondering how much you can get, you can use the student finance section on GOV.UK.

However, on our student finance applications page we cover where to get the tax information to include on your applications.

Repaying student loans

The main way of repaying student loans taken out since 1998 is via the tax system. You will deal with both the Student Loans Company (SLC) and HM Revenue & Customs (HMRC) when you leave or finish your studies and start paying back what you owe.

Repayments of student loans are usually not deductible expenses for tax purposes.

Other ways of financing studies

You might need to look at how to pay your course fees in the way that best uses your financial resources. This might involve taking out student loans, or you might use savings if you have them.

However, be careful if you sell assets (things) to help pay your fees. You might create a charge to capital gains tax.

Student loan plans repaid through the tax system

Our guidance is about income-based or income-contingent loans, which were first introduced in the autumn of 1998 and are repaid via the tax system.

 ‘Mortgage-style’ loans were in place up to autumn 1998. The repayments for them work differently and this guidance does not cover those rules. 

There are five main types of income-contingent loans, which are referred to as ‘Plan 1’, ‘Plan 2’, postgraduate, ‘Plan 4’ and ‘Plan 5’ loans. You might have more than one type of loan if you have been on more than one course. Which of them you have depends on what type of course you are on, when you took out the loan and which part of the UK you studied in – England, Northern Ireland, Scotland or Wales. Contact the Student Loans Company (SLC) if you are unsure which type(s) of loan you have.

There is information on GOV.UK about student finance if you are a student from Guernsey, Jersey or the Isle of Man.

Our page on student loan repayments contains information on when you start repaying your income-contingent loans and how repayments are calculated, depending on which loan plan you have.

Plan 1 loans generally include:

  • loans for Scottish (up to April 2021) and Northern Irish undergraduates and postgraduates
  • loans for English and Welsh undergraduates if you started your course before 1 September 2012

Plan 2 loans generally include:

  • loans for English undergraduates if you started your course from 1 September 2012 to 31 July 2023
  • loans for Welsh undergraduates if you started your course on or after 1 September 2012
  • Advanced Learner Loans from 1 August 2013 to 31 July 2023
  • Higher Education Short Course loans on or after 1 September 2022

Postgraduate loans generally include:

  • loans for English and Welsh postgraduate students where repayments started after April 2019. The way repayments are calculated for these postgraduate loans is different to repayments for Plan 1, Plan 2 and Plan 4 loans and we explain more about this in our postgraduate loans page.

Plan 4 loans:

  • This is a loan repayment plan for Scottish student loan borrowers who have received loans from the Student Award Agency for Scotland (SAAS). Plan 4 repayments started from April 2021 and replaced Plan 1 loans for Scottish undergraduates and postgraduates only.

Plan 5 loans:

  • These loans for English undergraduates start from 1 August 2023 so will not be repaid yet.
  • Advanced Learner Loans from 1 August 2023

All of these types of student loans are repaid via the tax system. You should receive an annual online statement each April detailing your loan balance, interest charged and any repayments made. The student loans online repayment service shows up-to-date information on repayments and loan balances. You can access your online student loan repayment account through GOV.UK.

It is very important that you update your contact details with the SLC, especially if you move abroad or are close to finishing repaying your loan.

In the subsequent pages, we cover how and when you pay back your student loans. To use this guidance, you need to select whether you are an employee or complete a self assessment tax return or if you are repaying more than one student loan or a postgraduate loan.

We also cover what to do about repaying your student loan if you go abroad for more than three months.

You should be aware that students are often targeted by fraudsters pretending to be either the SLC or HMRC. There is information on GOV.UK about these types of phishing and online scams.

Write-off of student loans

Student loans can sometimes be written off. This means that they will no longer have to be repaid.

Student loans being written-off depends on:

  • the loan type,
  • where the borrower lived when they took out the loan, and
  • when the course started.

Loans are also written off on death (see below) and there is discretion to write off loans earlier if the borrower receives a disability-related benefit and is permanently unable to work (there is more information about this on GOV.UK).

Type of loan When is loan written off?
Plan 1 It depends when you took out the loans. There is more information on GOV.UK
Plan 2 30 years after it becomes eligible to be repaid
Postgraduate (England and Wales) 30 years after it becomes eligible to be repaid
Plan 4 It depends on when you took out the loans. There is more information on GOV.UK

If you received a full-time student maintenance loan from Student Finance Wales, you may be able to have up to £1,500 of your maintenance loans cancelled. See GOV.UK for more information.

Student loans on death

If the student loan borrower dies, inform the Student Loans Company (SLC) of the borrower’s death to cancel their student loan. There is more information on this on GOV.UK.

For general help on tax-related duties following a death, see our page on Bereavement: tax issues on death.

More Information

There is information on GOV.UK about the repayment of different types of loans.

GOV.UK has a section on student finance explaining what loans you may be eligible to apply for.

Details of how to contact the Student Loans Company are on GOV.UK and HMRC have a guide on how to complete the student loan questions on a self assessment tax return.

Other websites that can provide more information to help students include:

  • MyBNk is a charity with a mission to bring financial education and enterprise to life for young people, aged 5-25. They offer classroom led activities, lesson plans, resources and also web content covering topics such as saving and budgeting.
  • NASMA (National Association of Student Money Advisers) is recognised as the leading authority on student advice and funding.
  • Student Loans Company (on GOV.UK) is the government organisation that administers the loans to students in universities and colleges in the UK.
  • UKCISA (UK Council for International Student Affairs) is an organisation which supports international students and those who work with them.
  • The Uni Guide provides an independent source of information and advice for anyone considering higher education.

Below are flowcharts explaining how you can repay your student loans if you are on a Plan 1, Plan 2, Plan 4 or Postgraduate loan.

 

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