Student loan repayments are a tough reality of university life. While it can be a significant burden anyway, it can be even more intimidating for those who are self-employed. As a freelancer, contractor, or small business owner, your student loan repayments will need to be included on your annual Self Assessment tax return.

‍Confused about how to go about managing your repayments? Don’t sweat, here’s everything you need to know about paying back a student loan when you’re self-employed.

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How much do you need to be earning before student loan repayments start? 

Whether you need to make repayments on your student loan and how much you repay depends on which repayment plan you are on. Your plan is determined by where you took out your loan and when you started your course. There are currently five types of loan in operation:

• Student Loan Plan 1
• Student Loan Plan 2
• Student Loan Plan 4
• Student Loan Plan 5
• Postgraduate Loan (sometimes referred to as Plan 3)

Which plan are you on?

• Plan 1 applies to loans taken out in England or Wales before 1 September 2012 and to all student loans in Northern Ireland. 
• Plan 2 applies to loans taken out in England or Wales between 1 September 2012 and 31 July 2023.
• Plan 4 applies to loans taken out in Scotland. From 6 April 2021 all Scottish undergraduate loans, including older Plan 1 loans, are treated under Plan 4 rules.
• Plan 5 applies to loans taken out in England or Wales on or after 1 August 2023.‍
• Postgraduate Loans apply to postgraduate master’s and doctoral loans taken out since 6 April 2019.

How much do I need to be earning before repayment starts?

The following tables show the thresholds to start repaying your student loans. For earlier years, please check HMRC’s website.

How and when do I repay my student loan?

Repayments are normally 9% of your income above the repayment threshold for Plans 1, 2, 4 and 5, and 6% for Postgraduate Loans. They are collected automatically through PAYE if you are employed, or through Self Assessment if you are self-employed.

Full-time courses – you start repaying in the April after you finish or leave your course, but only if you earn over the repayment threshold. For example, if you graduate in June 2020, repayments would begin in April 2021 if your income is above the threshold.

Part-time courses – repayments start in the April four years after your course began, or the April after you finish or leave your course, whichever comes first, provided your earnings are above the threshold.

Students in Northern Ireland only have Plan 1 loans. All Scottish undergraduate loans are now under Plan 4, which has a higher repayment threshold.

What about a Postgraduate Master’s Loan or Postgraduate Doctoral Loan?

You are on a Postgraduate Loan repayment plan if you are an English or Welsh student who took out a Postgraduate Master’s Loan or Postgraduate Doctoral Loan.

For these loans, repayments start from the April after you leave your course (or four years after the course started if you are studying part-time), but only if your income is above the repayment threshold. For the 2025–26 tax year, the threshold is £21,000 per year, £1,750 per month, or £403 per week. Repayments are calculated at 6% of your income above the threshold.

If you are a Scottish or Northern Irish student with a Postgraduate Tuition Fee Loan or a Scottish Postgraduate Living Cost Loan, repayments start once your income exceeds £18,330 per year, and deductions are at 9% of income above the threshold.

How does this affect me as a self-employed person?

If you complete and return your 2025/26 Self Assessment form to HMRC by 31st October 2025, HMRC will calculate how much you need to pay for student loan repayments, as well as the usual tax and National Insurance contributions. You can get your accountant to perform these calculations for you if you prefer (see below) and include these on your Self Assessment return for submission to HMRC by the deadline of 31st January 2027.

Your tax liability must be paid to HMRC by 31st January following the end of the tax year. HMRC will pass the details of your student loan repayment amount to the Student Loan Company, who will update your loan account accordingly.

What if I didn’t get my Self Assessment in before 31st October?

If you do not submit your Self Assessment to HMRC by 31 October, you must calculate your student loan repayment and include it on your tax return. All student loan holders must repay a percentage of their income above the repayment threshold: 9% for Plans 1, 2, 4 and 5, and 6% for Postgraduate Loans.

To calculate your repayment:

1. Determine your annual gross income‍

Include all taxable earnings such as salary, dividends, self-employment profits, and any other relevant income.

2. Subtract your repayment threshold

• Plan 1: £26,065 per year
  
  
• Plan 2: £28,470 per year
  
  
• Plan 4: £32,745 per year
  
  
• Plan 5: £25,000 per year
  
  
• Postgraduate Loans: £21,000 per year
  
  

3. The result is the portion of your income above the threshold.

4. Calculate your repayment

Multiply the amount above the threshold by the repayment rate: 9% for undergraduate loans and 6% for postgraduate loans. This gives your annual student loan repayment.

If your employer has already deducted student loan repayments through PAYE, you should include these amounts on your Self Assessment to ensure you do not pay twice.

You must submit your Self Assessment and pay all outstanding amounts, including student loans, by 31 January following the end of the tax year to avoid penalties or interest.

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Some worked examples of repayments for previous years

Example 1 - Loan taken out in Scotland

Joe took his loan out in Scotland, so he was originally affected by Plan 1, but as he has a Scottish Loan he will now be moving to Plan 4. In the 2024/25 tax year, he will have a gross salary of £16,000, with dividends of £18,000 and other earnings of £2,000. To find his annual loan repayment amount, he would:

• Add these amounts together, (making £36,000)
• Subtract the Plan 4 threshold of £31,395 for the 2024/25 tax year (leaving £4,605)
• Calculate 9% of £4,605, giving him an annual loan repayment of £414.45.

Example 2 - Loan taken out in England

Sarah took her loan out after 1st September 2012 in England, so she is affected by Plan 2. She had a gross salary of £16,000, with dividends of £12,000 and other earnings of £2,000. To find her annual loan repayment amount, she would:

• Add these amounts together, (making £30,000)
• Subtract the Plan 2 threshold of £27,295 (leaving £2,705)
• Calculate 9% of £2,705.00, giving her the annual loan repayment amount of £243.45.

Example 3 - Loan taken out in Wales

Stephen took out his loan before 1st September 2012 in Wales so he is affected by Plan 1. In the 2023/24 tax year, he had a gross salary of £8,788, dividends of £22,212 and no other income. To find his annual loan repayment amount, he would:

• Add these amounts together, (making £31,000)
• Subtract the Plan 1 threshold of £24,990 for the 2023/24 tax year (leaving £6,010)
• Calculate 9% of £6,010, giving him an annual loan repayment of £540.90.

Early repayments

There’s no penalty for paying some or all of your loan early. And you can choose to make voluntary payments even before you meet your plan's threshold if you wish.

If you’ve nearly paid off your loan

You can avoid overpaying if you know your loan will be paid off within the next two years. State on your Self Assessment tax return that your loan will be paid off in the next two years. Send your online tax return to HMRC before 1st November to avoid overpaying.