If you are self-employed and have a student loan, you need to understand how your repayments work. Unlike employees, where repayments are automatically deducted through PAYE, self-employed individuals manage their student loan repayments through their Self Assessment tax return.
This guide explains how student loan repayments work for self-employed individuals, the repayment thresholds, and what you need to do. For a complete overview of tax obligations, see our main Self-Employed Tax Return Accountant page.
How Student Loan Repayments Work for Self-Employed Individuals
Student loan repayments for self-employed individuals are calculated based on your ‘income’ in the tax year. Your income is your total taxable income, including your self-employed profits and any other income (e.g., from employment, savings interest, or investments).
The key point: Your student loan repayment is not a tax, but it is collected through the tax system. It is calculated as part of your Self Assessment and added to your tax bill.
Which Plan Are You On?
The repayment rules depend on the type (Plan) of student loan you have.
| Plan | Who Has It? | Repayment Threshold (2025-26) | Repayment Rate |
|---|---|---|---|
| Plan 1 | Students from England/Wales who started before 2012, and students from Scotland/NI. | £24,990 per year | 9% of income over the threshold |
| Plan 2 | Students from England/Wales who started between 2012 and 2023. | £27,295 per year | 9% of income over the threshold |
| Plan 4 | Students from Scotland who started after 1998. | £27,295 per year | 9% of income over the threshold |
| Plan 5 | Students from England who started from August 2023 onwards. | £25,000 per year | 9% of income over the threshold |
| Postgraduate Loan | Postgraduate Master’s loans from 2019-20. | £21,000 per year | 6% of income over the threshold |
How Your Repayment Is Calculated
Your repayment is calculated as a percentage of the amount by which your income exceeds the relevant repayment threshold.
Example (Plan 2)
- Your total income for the year is £35,000.
- The Plan 2 threshold is £27,295.
- Your income above the threshold is £7,705 (£35,000 – £27,295).
- Your student loan repayment: 9% x £7,705 = £693.45
This amount will be added to your tax bill and paid by 31 January following the end of the tax year.
How Your Repayment Is Collected
Your student loan repayment is included in your Self Assessment calculation and added to your overall tax bill.
- Your Self Assessment: When you file your tax return, the system calculates your student loan repayment. For a full guide, see our HMRC Self Assessment Guide.
- Your Tax Bill: The repayment amount is added to your Income Tax and National Insurance bill.
- Payment: You pay the total amount (tax + NI + student loan) by the 31 January deadline. For payment options, see our guide: HMRC Payment Methods.
What If You Have Both Employed and Self-Employed Income?
If you have a job as well as self-employment, the situation is different.
- Employment Income: Your student loan repayments will be deducted through PAYE as normal.
- Self-Employed Income: The student loan repayment is calculated on your total income, but the amount deducted through PAYE is taken into account. You will only pay the difference through your tax return.
What If You Don’t Earn Enough?
If your income is below the relevant repayment threshold, you do not have to make any repayments. However, interest will still accrue on your loan balance.
Interest on Student Loans
Interest on student loans is set by the government and varies depending on your plan. It is typically linked to the Retail Price Index (RPI). For self-employed individuals, interest starts accruing as soon as you start your course.
When Do You Stop Repaying?
Your student loan is written off after a certain period:
- Plan 1: 25 years after you first become eligible to repay, or when you turn 65 (whichever comes first).
- Plan 2: 30 years after the April you first become eligible to repay.
- Plan 4: 30 years after the April you first become eligible to repay.
- Plan 5: 40 years after the April you first become eligible to repay.
- Postgraduate Loan: 30 years after the April you first become eligible to repay.
Do You Need to Do Anything?
The student loan repayment is automatically calculated as part of your Self Assessment. You don’t need to do anything specific, except to ensure your tax return is accurate and includes all your income details.
How We Can Help
Understanding your student loan repayments can be confusing, especially with the different plans and thresholds. Our ACCA-qualified accountants can:
- Calculate your exact student loan repayment liability.
- Ensure it is correctly included in your Self Assessment.
- Provide advice on the impact of your student loan on your overall tax position.
Let us handle your Self Assessment, including your student loan.
📚 Related Guides
• HMRC Self Assessment Guide
• HMRC Payment Methods
• Self-Employed Allowable Expenses
• National Insurance for Self-Employed
• Cash Basis vs Traditional Accounting
• Self-Employed Tax Return Checklist
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