Student Loan Deductions Guide for Employers 2024/25
Employers collect student loan repayments via PAYE — but it's employees who pay them, not employers. Use this tool to understand how much is deducted from an employee's pay and how it affects their take-home. Covers all five loan plans and the Postgraduate Loan for 2024/25.
Employee Student Loan Deduction Guide
Understand the student loan deduction from an employee's pay — helps employers explain net take-home to staff
Enter the gross salary — then select the pay period below
The period your salary figure above refers to
Found on the employee's P45 or starter checklist — or check with the employee
2024/25 Student Loan Repayment Thresholds
| Plan | Annual threshold | Repayment rate |
|---|---|---|
| Plan 1 (pre-Sept 2012 England/Wales; Scotland/NI) | £24,990.00 | 9% |
| Plan 2 (post-Sept 2012 England/Wales) | £27,295.00 | 9% |
| Plan 4 (Scotland — post-Sept 1998) | £31,395.00 | 9% |
| Plan 5 (new undergraduate loans from 2023) | £25,000.00 | 9% |
| Postgraduate Loan (PGL) | £21,000.00 | 6% |
Important: Employer obligations
Employers do not contribute to student loan repayments — these are employee deductions only, collected via PAYE alongside income tax and National Insurance. Use this tool to help explain to employees why their take-home is lower than expected. If you are unsure which plan an employee is on, ask them to check their loan statements or ask HMRC via the NI/PAYE Business Service.
How Student Loan Deductions Work
Student loan repayments are deducted from employees' gross pay via PAYE — alongside income tax and National Insurance. The employer pays the deductions over to HMRC monthly. There is no employer cost; the full deduction comes from the employee's pay.
Employer Checklist
- Check the employee's P45 or starter checklist for their loan plan
- Configure the correct plan in your payroll software — deductions start automatically when earnings exceed the threshold
- Deduct the correct percentage each pay period (9% above threshold for Plans 1/2/4/5; 6% for PGL)
- Stop deductions when HMRC sends a Stop Notice — not before
- Include student loan deductions on the employee's payslip
What If an Employee Has Multiple Plans?
An employee can be on both an undergraduate plan (Plans 1, 2, 4, or 5) and a Postgraduate Loan simultaneously. Deductions are calculated independently for each plan and both are collected via PAYE.
FAQs
What if I over-deduct?
If you over-deduct student loan repayments, you must correct this through payroll in the same tax year if possible, or by contacting HMRC. The employee can also claim a refund from HMRC after the end of the tax year.
When do deductions stop?
Deductions stop when HMRC issues a Stop Notice — this happens automatically when the loan is repaid in full, written off (after 25/30 years depending on plan), or if the employee's income drops below the threshold for a sustained period. Do not stop deductions without a Stop Notice from HMRC.