Student Loan Repayments When You're Self-Employed: How It Actually Works

For employed people, student loan repayments are handled automatically through PAYE — they come out of every payslip alongside income tax and National Insurance, and the calculation is done by the employer. Self-employed people have a different experience: repayments are calculated and paid through Self Assessment, once a year, alongside the tax bill. This creates both the risk of underpaying throughout the year and the administrative responsibility of knowing what you owe.

How repayments work through Self Assessment

When you complete your Self Assessment tax return, HMRC uses your declared profit figure to calculate your student loan repayment for the year. The repayment amount appears on your tax calculation alongside income tax and National Insurance — it is collected in the same way and subject to the same payment deadlines.

Unlike income tax, which is collected in advance through payments on account, student loan repayments are typically collected retrospectively — you pay the full year's repayment (and any payments on account) by 31 January after the tax year ends.

However, from 2024/25, student loan repayments are included in payments on account calculations. If your previous year's Self Assessment included student loan repayments, those repayments are built into your January and July payments on account for the following year. This brings student loans into alignment with income tax payment timing.

The repayment thresholds and rates for 2026/27

Repayments are calculated on income above the threshold for your loan plan. Below the threshold, nothing is owed regardless of your loan balance.

| Plan | Threshold | Repayment rate | |---|---|---| | Plan 1 (pre-Sept 2012, Scotland/NI) | £24,990 | 9% | | Plan 2 (post-Sept 2012 English/Welsh, to July 2023) | £28,470 | 9% | | Plan 4 (Scottish SAAS loans) | £32,745 | 9% | | Plan 5 (English, from August 2023) | £25,000 | 9% | | Postgraduate Loan (Master's/Doctoral) | £21,000 | 6% |

Repayments are 9% (or 6% for Postgraduate) of income above the threshold — not of total income. If you earn £1 above the threshold, you repay a fraction of a penny. If you earn £10,000 above, you repay £900 (Plan 2 example).

Use the Student Loan Repayment Calculator to calculate your annual repayment based on your profit and plan.

What counts as income for student loan purposes

For self-employed people, the income used for student loan calculation is your total income from Self Assessment — broadly, trading profit plus any other income declared on the return (rental income, investment income, employment income if you have both).

This differs slightly from Class 4 NI, which is calculated only on trading profit. Student loan repayments consider total taxable income, meaning a self-employed person with both trading income and rental income will have both counted toward the threshold.

Example — Plan 2:

• Self-employment profit: £25,000
• Rental income: £6,000
• Total income: £31,000
• Income above Plan 2 threshold (£28,470): £2,530
• Student loan repayment: £2,530 × 9% = £227.70

Without the rental income, the profit of £25,000 would be below the Plan 2 threshold (£28,470), meaning no repayment at all. Including the rental income brings the total above the threshold.

Multiple loans

If you have both an undergraduate loan and a Postgraduate Loan, repayments are calculated separately for each plan and are owed simultaneously.

Example — Plan 2 + Postgraduate Loan:

• Total income: £40,000
• Plan 2 threshold: £28,470; income above: £11,530; repayment: £11,530 × 9% = £1,037.70
• PGL threshold: £21,000; income above: £19,000; repayment: £19,000 × 6% = £1,140
• Total student loan repayment: £1,037.70 + £1,140 = £2,177.70

The two repayments are owed together, declared separately on the Self Assessment return.

Declaring your student loan on the SA return

The Self Assessment return has specific questions about student loans:

• Are you liable to repay a student loan?
• Which plan are you on?
• Have you repaid all your loans?

If you have more than one loan plan, you can indicate multiple plans. HMRC's system calculates the repayment amount for each plan based on your income.

If you're unsure what plan you're on, check the Student Loans Company (studentloanscompany.co.uk) or your online account. Your original loan documentation will also state the plan type.

Overpayment and refunds

If you overpay student loan repayments (which can happen if income fluctuates significantly year to year), you can request a refund from the Student Loans Company. HMRC and SLC exchange information, but it's worth checking your SLC account after each tax year to confirm your repayments are correctly allocated and your loan balance is accurate.

Overpayment can also occur if your loan is written off and HMRC doesn't update your record in time — in this case, contact SLC to confirm write-off status and request any refund due.

When the loan is written off

Student loans are written off when you reach the end of the repayment period — the timing depends on your plan:

• Plan 1: 25 years after the April you were first due to repay
• Plan 2: 30 years after first due to repay, or when you reach age 65
• Plan 4: 30 years after first due to repay
• Plan 5: 40 years after first due to repay
• Postgraduate Loan: 30 years after first due to repay

Write-off is automatic — you don't need to apply. HMRC and SLC communicate the write-off, and you stop paying from the following tax year. At write-off, any remaining balance (including interest accrued) is cancelled with no tax consequences (unlike commercial debt forgiveness, which can be taxable).

For many self-employed people on Plan 2 with income below the threshold for long periods, write-off is a realistic outcome — particularly at lower incomes. Planning around whether you'll repay the full loan or reach write-off first is a legitimate financial decision that affects how much you should prioritise voluntary repayments.

Voluntary overpayments

If you want to pay down your student loan faster than required, you can make voluntary payments to SLC directly. This reduces the outstanding balance and future interest charges.

Whether voluntary overpayment makes financial sense depends on:

• Your interest rate (Plan 2 loans accrue interest at RPI + up to 3%, which has been historically high)
• Whether you'll realistically repay the full balance before write-off
• The opportunity cost of the cash (investing the money may produce better returns than the interest saved)

For Plan 2 borrowers on high incomes, where full repayment before 30 years is likely, voluntary overpayment to reduce interest costs can make sense. For lower earners where write-off before full repayment is probable, voluntary overpayments may simply reduce a debt that would have been written off anyway.

The Take-Home Pay Calculator models the impact of student loan repayments on your net income for employed income, while the Self Assessment Estimator incorporates student loan repayments into the full self-employed tax calculation.