By Lynne Gowers on 15th June 2016

Repaying Student Loans via Your Tax Return

student loans

Ah, those were the days. Lectures and cramming for exams in the library all day and still having the energy for a pub crawl before crawling to bed in the wee hours before waking up with a banging head (and a random traffic cone beside you – how did that get there?), only to do it all over again.
It’s easy to get nostalgic about student life but now you are out in the big bad world of contracting and it’s time to pay the piper in terms of student loans.

HMRC is responsible for collecting repayments of Income Contingent Repayment (ICR) student loans where the borrower is within the UK tax system and no longer in higher education. Repayments start from the April after you finish or leave your course.

Income thresholds

As of 6th April 2016, there are two income thresholds, known as plan 1 and plan 2.

If you are not sure what plan you are on click here.

The current plan 1 threshold is £17,495. If you earn less than this you don’t have to make any repayments. If you were employed, HMRC would divide this into £1,457 a month or £336 a week.

If your deductions are based on plan 2, the threshold is £21,000. Under PAYE, HMRC would split this into £1,750 per month or £403 per week. Student loan repayments are collected at a rate of 9% on income over these limits.

Accounting factoid: HMRC uses the same earnings figure to calculate student loan deductions as they do to calculate employers secondary Class 1 National Insurance contributions.

Working out your repayments under self assessment

Start by including all of your relevant income, including self-employed profits, any employment income and any unearned income over £2,000.

In your return you will be asked to confirm your student loan status. Repayments are then worked out along with any tax and NI contributions. Self assessment student loan repayments are due to be paid by 31st January following the year of assessment, therefore they will be included in your usual balancing payment each year.

HMRC’s calculation

Your self assessment student loan calculation is based on all relevant income in your tax return. The calculation will take into account any deductions made during periods of employment but you may have to pay an additional amount when you come to pay your annual balancing payment under self assessment.

How does the Student Loan Company (SLC) get told?

When they receive your tax return, HMRC will calculate your final self assessment balancing payment which is due on or before 31st January each year. They will then pass details of amounts you have repaid to the SLC who will credit your student loan account.

Voluntary payments

If you wish to, you can make additional voluntary payments towards outstanding student loans. These will always be on top of any amounts that HMRC collect through either PAYE or self-assessment.


Questions? Get in touch with the accounting team at Boox.

Lynne Gowers Written by Lynne Gowers

Was this article helpful?


Although we attempt to ensure that the Information contained in this publication is accurate and up-to-date at the date of publication it may not be comprehensive, we accept no liability for the results of any action taken on the basis of the information they contain and any implied warranties, including but not limited to the implied warranties of satisfactory quality, fitness for a particular purpose, non-infringement and accuracy are excluded to the extent that they may be excluded as a matter of law.

Share this blog

Download our
FREE guide

Our guide to choosing the right accounting software walks you through the market leaders to help you choose the right platform for your business

Please enter a First Name

Please enter a Last Name

Please enter a valid Email Address

Please enter a valid Mobile/Phone Number

Data protection: We take data very seriously and will not share your details with anyone else. If you wish to receive marketing communications from Boox please tick this box.

You can change your preferences at any stage by clicking on the 'Manage my preferences' link at the bottom of our emails. By continuing, you agree to our Privacy Policy.

How would you like to receive communications?


Select Yes or No


Select Yes or No


Select Yes or No


Select Yes or No
Please Verify Captcha

View our latest blogs

Take a look at our recent blogs below.

We’re here to help

Discuss your business and accountancy
needs in detail with our friendly team with
absolutely no obligation.

Call our friendly team on 0808 168 0422 or

Request a call back

(Open 8.30am to 5.30pm Monday to Friday)

Emily Ewin New Client Manager
Emily Ewin New Client Manager