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    TaxKilnUK tax guidance
    TaxKilnUK tax guidance

    UK Student Loans → Plan type guide

    UK Student Loan Plan Types — Plan 1 / 2 / 4 / 5 / Postgraduate (2025/26 Thresholds)

    Five repayment plans currently coexist in the UK — your plan depends on when and where you started, what you studied, and whether you have multiple loans. Plan 1 covers most pre-September 2012 starters in England, Wales and Northern Ireland (and pre-2007 Scottish undergraduates). Plan 2 covers England and Wales undergraduates who started between September 2012 and July 2023. Plan 4 is the Scottish plan from 2021 onwards (administered by SAAS but repaid via SLC). Plan 5 was introduced for new England and Wales undergraduates from August 2023 with materially harsher terms (40-year write-off; £25,000 frozen threshold; RPI-only interest). Postgraduate Loan — labelled 'Plan 3' in HMRC PAYE wiring — covers England and Wales postgraduates from 2016 onwards at a £21,000 threshold and 6% rate. Mature returners and career-changers often hold combinations (Plan 1 + Plan 5; Plan 2 + Postgraduate). Identify your plan via your SLC online account, loan reference prefix, or the PAYE tax code on your payslip.

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    Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact HMRC. Read our editorial scope →

    In plain English

    Three things determine your plan: when you started, where you studied, and what level (UG vs PG). The thresholds are the income above which 9% (6% for PG) is deducted — not your full income. Plan 1: most pre-September 2012 England/Wales/NI undergraduates plus pre-2007 Scottish undergraduates. Threshold £26,065 in 2025/26. Interest capped at the lower of RPI or the Bank of England base rate + 1%. Plan 2: September 2012 to July 2023 England/Wales undergraduates. Threshold £28,470 in 2025/26 (uplifted annually). Interest slides from RPI (income under threshold) to RPI+3% (high earners). Plan 4: Scottish students from 2021 onwards. SAAS handles funding; SLC handles repayment. Threshold £32,745 in 2025/26 — the highest of the five. Plan 5: new England/Wales undergraduates from August 2023 onwards. Threshold £25,000 — FROZEN, not uplifted. Interest RPI only. Write-off 40 years instead of 30. See the Plan 5 deep-dive page for the IFS lifetime modelling. Postgraduate Loan ('Plan 3' inside HMRC PAYE): England/Wales postgraduates 2016+. Threshold £21,000 in 2025/26 at 6% rate. Runs ADDITIVELY alongside undergraduate plans — Plan 2 + Postgraduate means 9% above £28,470 PLUS 6% above £21,000. Identification: log into your SLC online account; check the loan reference prefix; check your latest payslip tax code (SL1 = undergraduate Plan deduction starts; SL2 / PGL1 etc indicate plan + postgraduate).

    How it works

    Plan 1 — pre-September 2012 cohorts

    Plan 1 covers most pre-September 2012 starters in England, Wales and Northern Ireland, plus pre-2007 Scottish undergraduates who later moved into the SLC repayment system. Interest is capped at the lower of RPI or the Bank of England base rate + 1% — historically the most borrower-friendly interest formula. 2025/26 threshold £26,065 (note: the correct 2025/26 figure is £26,065, NOT £26,900 which has been published in some secondary sources). Write-off at 25 years from the April first eligible to repay, or age 65 for some pre-2006 transitional starters.

    Plan 2 — England/Wales 2012-2023 undergraduates

    Plan 2 applies to England and Wales undergraduates with courses starting September 2012 to July 2023. Threshold £28,470 in 2025/26, uplifted annually. Interest slides from RPI (income under threshold) up to RPI+3% (income above the higher threshold). Write-off at 30 years. The Welsh tuition fee variation (lower fee + higher maintenance grant historically) affects loan size but not the repayment plan classification — Welsh-domiciled students on courses in Wales are still on the relevant Plan.

    Plan 4 — Scottish 2021+

    Plan 4 is the Scottish-administered loan from 2021 onwards. SAAS (Student Awards Agency Scotland) handles disbursement and entitlement; SLC handles repayment. Threshold £32,745 in 2025/26 — the highest of the five plans — reflecting Scottish policy of lower repayment burden. Interest capped at RPI. Write-off at 30 years. Scottish-domiciled students at Scottish institutions typically have no tuition fee loan (free tuition for eligible Scots in Scotland), so loan balance is largely maintenance.

    Plan 5 — England/Wales August 2023+ (the harsh new terms)

    Plan 5 applies to new England and Wales undergraduates starting August 2023 onwards. Threshold £25,000 — FROZEN from launch, not uplifted with inflation. 9% on income above threshold. RPI-only interest (lower nominal than Plan 2's RPI+3% sliding scale but compounding over 40 years instead of 30). Write-off 40 years. The Lifelong Learning Entitlement (LLE) £38,140 is the funding cap (calculated as 4 × the 2025/26 tuition cap of £9,535 — verify against gov.uk before relying on this figure). See the Plan 5 deep-dive page for the Augar Review context, the 2021 government decision, and IFS modelling of lifetime repayment vs Plan 2.

    Postgraduate Loan — 'Plan 3' in HMRC PAYE

    The Postgraduate Loan (PGL) covers England and Wales master's and doctoral students 2016 onwards. Threshold £21,000 in 2025/26 at 6% deduction rate (NOT 9%). Interest RPI+3%. Write-off at 30 years. HMRC PAYE refers to it as 'Plan 3' for tax code purposes (PGL1 notice). Crucially, PGL runs ADDITIVELY alongside an undergraduate plan: a Plan 2 + Postgraduate borrower earning £40,000 pays 9% on (£40,000 − £28,470) = £1,038 + 6% on (£40,000 − £21,000) = £1,140, total £2,178/year deducted.

    Identifying your plan + combinations

    Three reliable identification routes: (1) SLC online account — shows plan, balance, interest rate, and projected repayment. (2) Loan reference prefix — different prefixes by plan + year of start. (3) Payslip tax code notices: SL1 (start undergraduate deduction), SL2 (stop), PGL1/PGL2 (postgraduate start/stop). For mature returners with multiple loans (e.g. Plan 1 undergraduate 2008 + Plan 5 second-degree 2024) HMRC machinery handles deduction across both plans simultaneously, with both deducted via separate codes.

    Who this applies to + key conditions

    Statute + manual references

    Primary: Teaching and Higher Education Act 1998; Higher Education Act 2004; Education (Student Loans) (Repayment) Regulations 2009 (SI 2009/470) + annual amendments setting thresholds and rates; Higher Education and Research Act 2017.

    Related: Education (Student Loans) (Repayment) (Amendment) Regulations — annual SI setting thresholds (verify current year); Income Tax (Earnings and Pensions) Act 2003 (ITEPA) Part 11 — PAYE machinery used to collect student loan deductions; Finance Act provisions linking student loan deduction to Self Assessment for non-PAYE income; Welsh Government regulations (devolved Welsh tuition fee variation); Scottish Statutory Instruments — Plan 4 + SAAS-administered loans

    HMRC manual: PAYE54000 (Student Loan deductions overview); PAYE15001 onwards (employer mechanics + start/stop notices SL1/SL2/PGL1)

    Common mistakes + traps

    Worked example

    Daniel, mid-career returner in Cardiff, starting a second degree in 2024 having repaid most of his Plan 1 loan

    Daniel finished his first undergraduate degree in 2010 (Plan 1) and has been paying via PAYE since 2013. By 2024 his Plan 1 balance is £4,200 outstanding. He starts a new full-time undergraduate course in September 2024 in England, taking a Plan 5 maintenance loan + tuition fee loan totalling £28,000 over three years. From 2027 he returns to PAYE employment earning £42,000.

    1. Step 1 — Identify Daniel's plans. Pre-Sep 2012 starter = Plan 1 (existing). Aug 2023+ new starter = Plan 5 (new). Both plans coexist.
    2. Step 2 — Apply 2027/28 indicative thresholds (uplift Plan 1 modestly; Plan 5 frozen at £25,000). Assume Plan 1 threshold uplifted to roughly £27,500 for illustration; Plan 5 stays £25,000.
    3. Step 3 — Plan 1 deduction at £42,000: 9% × (£42,000 − £27,500) = 9% × £14,500 = £1,305/year.
    4. Step 4 — Plan 5 deduction at £42,000: 9% × (£42,000 − £25,000) = 9% × £17,000 = £1,530/year.
    5. Step 5 — Total deduction £1,305 + £1,530 = £2,835/year (around £236/month). Both plans deducted via separate HMRC tax code lines.
    6. Step 6 — Voluntary repayment thinking. Plan 1 balance £4,200 will clear in roughly 3.2 years at £1,305/year — voluntary lump-sum to clear may make sense if cash earns less than Plan 1 interest. Plan 5 balance £28,000 + interest at 40-year horizon — voluntary repayment likely wasted as Daniel may not repay in full before 40-year write-off. See voluntary repayment decision page.
    7. Step 7 — Anti-charlatan check: a 'multi-plan optimisation specialist' £400 fee is unwarranted; this is mechanical additive deduction with no optimisation to perform. SLC + HMRC handle both plans automatically.

    Outcome: £2,835/year combined PAYE deduction. Plan 1 voluntary clearance arguably rational on opportunity-cost grounds; Plan 5 voluntary repayment likely poor value given 40-year write-off horizon.

    How this connects to the rest of the framework

    Plan 5 deep dive →

    Plan 5 deserves a dedicated deep-dive because of the 40-year write-off + frozen threshold + IFS lifetime modelling.

    Repayment mechanics →

    Plan-type identification feeds into PAYE + SA repayment mechanics for actual collection.

    Write-off + cancellation →

    Write-off ages differ materially by plan — 25 / 30 / 30 / 40 / 30 — which shapes the voluntary repayment decision.

    Voluntary repayment decision →

    Plan type is the dominant input to the voluntary repayment math — Plan 5 borrowers most likely never repay full balance.

    /self-assessment-guide →

    Self-employed and mixed-income borrowers settle student loan deductions via SA, not PAYE — see Self Assessment guide.

    Frequently asked questions

    What happens if I miss the Self Assessment deadline?+
    The Self Assessment deadline is 31 January (online filing) for the previous tax year. Miss it and HMRC apply an automatic £100 penalty. Beyond that: £10 per day from 3 months late (capped at £900), 5% of tax due at 6 months late, and another 5% at 12 months late, under Schedule 55 of the Taxes Management Act 1970. If you have a genuine reason (serious illness, bereavement, technical issue with HMRC's systems) you can appeal with evidence; HMRC accepts reasonable excuse appeals in most genuine cases.
    Do I need an accountant or can I file Self Assessment myself?+
    Legally you can file Self Assessment yourself via gov.uk for free, most simple sole-trader returns (single income source, basic expenses) are realistic to self-file. An accountant adds real value when: your trading profit is above £40,000 (extraction-strategy decisions matter), you have multiple income streams (PAYE + self-employment + property + dividends), you've crossed the £90,000 VAT threshold, you're considering incorporation, or you have an HMRC enquiry. Expect to pay £400-£1,500/year for a typical sole-trader accountant; the cost is itself a deductible expense.
    How do payments on account work?+
    When your Self Assessment tax bill exceeds £1,000 for the first time, HMRC requires payments on account toward NEXT year's tax. Half the current bill is due 31 January (alongside the current bill); the other half is due 31 July. So your first January after crossing the threshold can hit with a double-bill: last year's balance + first payment on account. Adjust via Form SA303 if you expect next year's income to drop substantially. Payments on account don't apply if more than 80% of your tax is collected via PAYE.
    How do I know my plan if I never had a letter from SLC?+
    Log into your SLC online account (slc.co.uk) — it shows plan, balance and projected repayment. If you can't access the account, call SLC with your National Insurance number; they identify your plan from their records. Your latest payslip tax code section may also show 'SL' or 'PGL' codes.
    Do I have to start repaying as soon as I leave university?+
    No — repayment starts the April after you finish or leave, AND once your income exceeds the plan threshold. If you're below threshold, no repayment is deducted, but interest still accrues per the plan formula.
    What is the LLE £38,140 figure I keep seeing?+
    The Lifelong Learning Entitlement (LLE), being rolled out 2025/26, is the lifetime funding cap for higher-level study in England. £38,140 is roughly 4 × £9,535 (2025/26 tuition cap) — the equivalent of four years of full-time degree funding spread across modular study. Verify the current figure on gov.uk before relying on it; mechanics are still bedding in.
    Does my plan change if I move overseas?+
    No — your plan classification is fixed by when and where you started. Overseas, repayment mechanics change (you complete an OIAF instead of PAYE — see overseas-repayment page) but the plan rules + interest + write-off remain the same.

    Free + regulated-body resources

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