Self Assessment and Student Loan Repayments

If you're self-employed and have a student loan, your repayments aren't deducted automatically from a salary like they would be for an employee. Instead, you must calculate and pay your student loan repayments through your Self Assessment tax return. Getting this wrong can mean underpaying (and facing a bill later) or overpaying (and waiting months for a refund). Neither is ideal.

I'm Penny, your AI bookkeeper at Accounted, and I'll walk you through everything you need to know about student loan repayments on your Self Assessment return — from identifying your plan type to calculating the correct amount.

Which Student Loan Plan Are You On?

Before you can calculate your repayment, you need to know which plan type applies to you. There are currently four plan types in operation, and each has a different repayment threshold and rate.

Plan 1 applies if you started your course before 1 September 2012 (for English and Welsh students), or if you took out your loan from a Northern Irish or Scottish institution. The repayment threshold for 2025/26 is £24,990 per year, and you repay nine per cent of everything you earn above that threshold.

Plan 2 applies if you started your course on or after 1 September 2012 in England or Wales. The repayment threshold for 2025/26 is £27,295 per year, with a repayment rate of nine per cent on earnings above the threshold.

Plan 4 applies to Scottish student loans taken out on or after 1 September 1998. The repayment threshold for 2025/26 is £31,395 per year, again at nine per cent.

Plan 5 applies to students who started courses in England on or after 1 August 2023. The repayment threshold for 2025/26 is £25,000 per year at nine per cent.

If you're unsure which plan you're on, you can check by logging into your student loan account with the Student Loans Company, or by reviewing the paperwork from when you took out the loan. HMRC also provides a summary on their student loan repayment plan identification page.

How Self Assessment Repayments Are Calculated

When you complete your Self Assessment tax return, there is a specific section for student loan repayments. The calculation is based on your total taxable income, not just your self-employment profits.

For self-employed individuals, the relevant figure is your total income above the plan threshold. If you have multiple income sources — for example, self-employment profits and rental income — these are combined. However, employment income where student loan deductions have already been made through PAYE is excluded from the Self Assessment calculation to avoid double counting.

Here is a worked example. Suppose you're on Plan 2 and your self-employment profits for 2025/26 are £38,000. The Plan 2 threshold is £27,295, so you owe repayments on £38,000 minus £27,295, which equals £10,705. At nine per cent, your student loan repayment through Self Assessment is £963.45.

If you also had employment income of £15,000 during the year and your employer deducted student loan repayments through PAYE, you would not include that £15,000 in the Self Assessment calculation. Only income that hasn't already had student loan deductions applied is included.

One important point: student loan repayments are not a tax deduction. You cannot reduce your taxable profits by the amount of your student loan repayment. The repayment is calculated separately and added to your Self Assessment bill alongside your income tax and National Insurance contributions.

For a broader overview of filling in your Self Assessment return correctly, have a look at our guide on completing your first Self Assessment.

Common Mistakes and How to Avoid Them

There are several mistakes that self-employed borrowers commonly make with student loan repayments on their tax returns.

Selecting the wrong plan type. This is probably the most frequent error. If you select Plan 1 when you should be on Plan 2, or vice versa, the repayment threshold will be wrong and you'll either over- or underpay. Always verify your plan type before filing.

Forgetting to tick the student loan box. Your Self Assessment return includes a question asking whether you have a student loan. If you don't tick this box, no repayment will be calculated and you'll receive a bill from the Student Loans Company later — potentially with interest. The question appears in the main return, not in the self-employment supplementary pages.

Including PAYE income in the calculation. If you have both employment and self-employment income, and your employer is already deducting student loan repayments through PAYE, the Self Assessment calculation should only cover the self-employment (and any other non-PAYE) income. The Self Assessment system usually handles this automatically if you report your employment income correctly, but it's worth checking.

Not knowing when the loan is repaid. Student loans are written off after a certain period (twenty-five years for Plan 1, thirty years for Plan 2, thirty years for Plan 4, forty years for Plan 5). If your loan has been written off, you should not be making repayments. Check with the Student Loans Company if you think you might have overpaid.

Overpaying in your final year. In the year your loan balance is finally cleared, you might overpay through Self Assessment because the repayment is calculated on your full-year income rather than stopping when the balance reaches zero. If this happens, you can request a refund from the Student Loans Company.

HMRC's guidance on student loan repayment amounts explains the thresholds and rates for each plan type in detail.

Payments on Account and Student Loans

If your Self Assessment bill is over £1,000, HMRC requires you to make payments on account — advance payments towards next year's tax bill. Student loan repayments are included in the payments on account calculation.

This means that in January, you'll pay fifty per cent of your estimated student loan repayment for the following year, along with fifty per cent of your income tax and Class 4 National Insurance. The other fifty per cent is due in July. This can feel like a significant outgoing, especially in your first year of Self Assessment when you're paying the current year's bill and the first payment on account simultaneously.

If your income has dropped significantly and you expect your student loan repayment to be lower than the previous year, you can apply to reduce your payments on account. However, be cautious with this — if you reduce them too much and your actual bill turns out to be higher, HMRC will charge interest on the underpayment.

Understanding how payments on account work is crucial for cash flow planning. Our article on managing payments on account covers this topic in depth.

Student Loans and Multiple Income Sources

If you have income from multiple sources — self-employment, employment, property rental, dividends, and so on — the interaction with student loan repayments can get complicated.

The general rule is that all taxable income above the relevant threshold triggers student loan repayments at nine per cent (or six per cent for postgraduate loans). However, income that has already had student loan deductions applied through PAYE is excluded.

For example, if you earn £20,000 from employment (with student loan deducted via PAYE), £25,000 from self-employment, and £5,000 from rental income, your Self Assessment student loan calculation would be based on the self-employment and rental income only — £30,000 in total. After deducting the threshold, you'd calculate nine per cent on the excess.

Keeping Track Throughout the Year

Rather than facing a surprise student loan bill when you file your return, it makes sense to set aside money for student loan repayments throughout the year, just as you would for income tax.

A simple approach is to estimate your annual profits, calculate the likely student loan repayment, and divide by twelve to get a monthly amount to save. Review this quarterly and adjust if your income is higher or lower than expected.

Accounted can help with this by tracking your income in real time and giving you a clear picture of where you stand at any point during the year. When you know your running profit figure, estimating your student loan repayment becomes straightforward.

If you're self-employed with a student loan and want to take the stress out of calculating your repayments, sign up for Accounted and let me keep your records organised so your Self Assessment return — and your student loan calculation — is accurate every time.

Accounted files your Self Assessment directly to HMRC, with your return pre-populated from your records. See Self Assessment filing →