Student Loan Repayments When Self-Employed

The Accounted Tax Team·28 February 2026·12 min read

If you have a student loan and have moved into self-employment, your repayment method changes fundamentally. There is no employer to deduct repayments from your salary each month. Instead, you calculate and pay your student loan repayments through your Self Assessment tax return, alongside your income tax and National Insurance.

This shift catches many newly self-employed people off guard. In this guide, we explain how student loan repayments work when you are self-employed, break down the thresholds for each plan type, and show you how Penny on Accounted can estimate your liability well before the bill arrives.

How Student Loan Repayment Works Through Self Assessment

When you are employed, your employer deducts student loan repayments from your salary automatically through PAYE. The deduction happens every pay day, and you barely notice it (aside from the dent in your take-home pay).

When you are self-employed, this automatic deduction does not exist. Instead, you calculate your student loan repayment as part of your Self Assessment tax return, and you pay it alongside your tax bill.

The repayment is calculated on your total income above the relevant threshold, not just your self-employed profits. This means all sources of income count: self-employment profits, rental income, savings interest, dividends, and any employment income that was not already subject to student loan deductions through PAYE.

Here is the key point that surprises many people: because you pay through Self Assessment rather than monthly PAYE deductions, the repayment arrives as a lump sum. If you have a good year of trading, the student loan repayment on top of your income tax and National Insurance can be a substantial amount.

You can find full details on what you pay and the current thresholds on the GOV.UK student loan repayment page.

Understanding the Different Plan Types and Thresholds

There are currently four undergraduate loan plan types, plus the Postgraduate Loan, each with different repayment thresholds and rates. Which plan you are on depends on when and where you took out your loan.

Plan 1

Plan 1 applies if you took out your loan before 1 September 2012 (England and Wales) or if you took out your loan in Northern Ireland or Scotland (regardless of date, for Scottish loans that predate Plan 4).

Repayment threshold (2025-26): £24,990 per year
Repayment rate: 9% of income above the threshold

Plan 2

Plan 2 applies if you took out your loan on or after 1 September 2012 in England or Wales.

Repayment threshold (2025-26): £27,295 per year
Repayment rate: 9% of income above the threshold

Plan 4

Plan 4 applies to Scottish student loans taken out on or after 1 September 1998.

Repayment threshold (2025-26): £31,395 per year
Repayment rate: 9% of income above the threshold

Plan 5

Plan 5 applies to new student loans taken out from 1 August 2023 onwards in England.

Repayment threshold (2025-26): £25,000 per year
Repayment rate: 9% of income above the threshold

Postgraduate Loan

If you took out a Postgraduate Master's or Doctoral Loan, you repay under the Postgraduate Loan plan.

Repayment threshold (2025-26): £21,000 per year
Repayment rate: 6% of income above the threshold

Importantly, if you have both an undergraduate loan and a postgraduate loan, you make repayments on both simultaneously. The total deduction can therefore be 15% of your income above the relevant thresholds (9% undergraduate plus 6% postgraduate). For further details on the broader student finance system, see the GOV.UK student finance repayment page.

How to Check Which Plan You Are On

If you are not sure which plan you are on, log into your student loan account on the Student Loans Company website at www.gov.uk/sign-in-to-manage-your-student-loan-balance. It will show your plan type and outstanding balance. You can also call the SLC repayment helpline. Getting the plan type wrong on your Self Assessment return is one of the most common mistakes, and it means calculating the wrong threshold and potentially paying the wrong amount.

Calculating Your Repayment Amount

The calculation is straightforward in principle, though the numbers can be surprising.

Step 1: Determine your total income for the tax year. For Self Assessment purposes, this is typically your net self-employment profit (turnover minus allowable expenses) plus any other income.

Step 2: Subtract the repayment threshold for your plan type.

Step 3: Multiply the result by the repayment rate (9% for undergraduate plans, 6% for postgraduate).

Step 4: If you also had employment income during the year on which student loan deductions were already made through PAYE, subtract those deductions from the total liability to avoid double counting.

Worked Example

Let us say you are on Plan 2 and your self-employment profits for 2025-26 are £45,000 with no other income.

Income above threshold: £45,000 - £27,295 = £17,705
Student loan repayment: £17,705 x 9% = £1,593.45

This £1,593 is payable in addition to your income tax and National Insurance. If you also had a postgraduate loan, you would calculate a further 6% of income above the £21,000 threshold:

Income above PG threshold: £45,000 - £21,000 = £24,000
Postgraduate repayment: £24,000 x 6% = £1,440

Total student loan repayments: £1,593 + £1,440 = £3,033

That is a significant sum on top of your other tax obligations, and one that many self-employed people do not budget for.

Worked Example — Plan 1 with Employment Income

Mike works part-time as an employed plumber earning £15,000 and runs his own business on the side making £20,000 net profit.

Total income: £35,000
Plan 1 threshold: £24,990
Income above threshold: £35,000 - £24,990 = £10,010
Total repayment due: 9% of £10,010 = £900.90

His employer will have been deducting Plan 1 repayments from his £15,000 salary throughout the year. Since £15,000 is below the £24,990 threshold, no repayments will have been taken through PAYE. So the full £900.90 is collected through Self Assessment.

If his salary had been above the threshold, some repayments would already have been deducted through PAYE, and Self Assessment would collect only the remainder.

Payment Dates and Payments on Account

Student loan repayments through Self Assessment follow the same payment schedule as income tax:

31 January after the end of the tax year: balancing payment for the previous year, plus first payment on account for the current year
31 July: second payment on account for the current year

Payments on account are each set at 50% of the previous year's total liability (including student loan repayments). This means that once you start making student loan repayments through Self Assessment, HMRC will ask you to make advance payments in the following year.

For example, if your 2025-26 student loan repayment is £1,593, your payments on account for 2026-27 will each include approximately £797, payable in January and July. If your income changes significantly, you can apply to reduce your payments on account, but be careful: if you reduce too much and your actual liability is higher, you will face interest on the underpayment.

Mixed Income: Employed AND Self-Employed

Many self-employed people also have some employment income, perhaps from a part-time job, a portfolio career, or a transitional period while building their business. When you have both employed and self-employed income, the student loan repayment calculation requires care.

Your employer will deduct student loan repayments from your employment income through PAYE. Your Self Assessment return then calculates the total repayment due on all your income combined and gives you credit for what has already been deducted.

Here is how it works:

Calculate the total student loan repayment on your combined income (employment plus self-employment plus any other income)
Deduct the amount already collected through PAYE
The difference is what you pay through Self Assessment

This can result in a higher total repayment than you might expect if your combined income pushes you further above the threshold. It can also occasionally result in a refund credit if your employer over-deducted, though this is less common.

One area to watch: if your total income is close to the threshold, small changes in your self-employment profit can trigger or eliminate a student loan repayment. Penny keeps a running estimate of your projected student loan liability throughout the year, so you are never caught off guard. You can view this alongside your tax and NIC estimates on the Accounted features dashboard.

Where Student Loans Go on Your Tax Return

On the SA100 (the main Self Assessment form), there is a section specifically for student loan repayments. You need to:

Tick the box to confirm you have a student loan
Select the correct plan type — this is critical, as the wrong plan means the wrong threshold and the wrong repayment amount
If you have a postgraduate loan, tick the separate box for that

HMRC calculates the repayment based on your total income as reported on the return. The amount due appears on your tax calculation alongside your income tax, NICs, and any other liabilities.

Common Misconceptions

There are several myths and misunderstandings about student loan repayments for the self-employed. Let us clear them up.

"I don't need to worry about student loan repayments until HMRC contacts me."

Wrong. It is your responsibility to include student loan repayments on your Self Assessment return. HMRC may issue a notice reminding you, but the obligation is on you. If you fail to include it, you could face penalties for an inaccurate return.

"My student loan will be written off soon so I don't need to pay."

Plan 1 loans are written off 25 years after the April you were first due to repay. Plan 2 loans are written off 30 years after the April you were first due to repay. Plan 4 loans are written off 30 years after the April you were first due to repay, or when you turn 65, whichever comes first. Plan 5 loans are written off 40 years after the April you were first due to repay. Postgraduate loans are written off 30 years after the April you were first due to repay. Until that date, you are legally required to make repayments if your income exceeds the threshold. If your loan is approaching its write-off date, check with SLC — there is no point making repayments on a loan that is about to be cancelled.

"I can choose not to repay through Self Assessment and just let the Student Loans Company chase me."

Student loan repayments through Self Assessment are not optional. They are a legal obligation calculated as part of your tax return. HMRC collects them on behalf of the Student Loans Company, and failure to pay carries the same consequences as unpaid tax.

"If my business makes a loss, I still have to make student loan repayments."

Not necessarily. If your total income for the year is below the repayment threshold, you owe nothing. A trading loss can reduce your total income and eliminate or reduce your student loan repayment.

"Student loan repayments are a tax-deductible business expense."

Absolutely not. Student loan repayments are a personal obligation, not a business expense. They are calculated on your income but are not deductible from it.

"I have been employed for years so my student loan is all sorted."

Some people genuinely forget they have a student loan, especially if they have been employed for years and the repayment came out of their pay automatically. When they go self-employed, nothing is deducted, and they assume everything is sorted. It is not. HMRC will eventually catch up, and you may face a large bill plus interest.

"My loan is nearly paid off, so I will just keep paying through Self Assessment."

Be careful here. The Student Loans Company is notoriously slow at confirming when loans are fully repaid. If your balance is getting close to zero, contact SLC to check. If they confirm the loan is repaid, you do not need to tick the student loan box on your next return. If you overpay, you can claim a refund from SLC, but it takes time.

Claiming Back Overpayments

If you have overpaid your student loan — whether through Self Assessment or PAYE — you can claim a refund from the Student Loans Company (not HMRC). Contact SLC with evidence of overpayment. They will review and refund the excess, usually within four to twelve weeks.

Keep all your tax calculations and payslips as evidence. If you use Accounted, Penny keeps a clear record of your income throughout the year, making it straightforward to check whether your repayments match what you actually owed.

If your income drops significantly compared to the previous year, you could also end up overpaying through payments on account. You can apply to reduce your payments on account if your income is lower than the previous year — see the Payment Dates section above.

How Penny Estimates Your Student Loan Liability

One of the most stressful aspects of student loan repayments for the self-employed is the uncertainty. Unlike PAYE deductions that happen automatically each month, Self Assessment creates a situation where you do not know your full liability until you file your return, often months after the tax year ends.

Penny addresses this by maintaining a real-time estimate of your student loan repayment throughout the year. As you record income and expenses through WhatsApp messages and bank feed imports, Penny updates your projected annual profit and calculates the estimated student loan repayment for your plan type.

She factors in:

Your current plan type (Plan 1, 2, 4, 5, or Postgraduate)
The relevant repayment threshold
Your projected annual self-employment profit
Any employment income you have told her about
PAYE deductions already made by your employer

This means you can see, in real time, what your student loan repayment is likely to be and set money aside accordingly. No more January surprises.

If you are approaching your filing deadline and want to check how student loan repayments fit into your overall Self Assessment picture, our guide on how to file Self Assessment for 2026 covers the full process including student loan sections.

Planning Ahead: Budgeting for Repayments

The best advice we can give self-employed people with student loans is to budget for repayments from day one. A common rule of thumb is to save 30-35% of your income for tax, NIC, and student loan repayments combined. If you have both an undergraduate and postgraduate loan, consider saving closer to 40%.

Build student loan repayments into your cash flow planning. When you set aside money each month for your tax bill, include an estimate for student loan repayments. For example, if your net profit is £35,000 and you are on Plan 2, set aside roughly £80 per month for student loan repayments on top of your tax and NIC savings.

Review Penny's estimates quarterly as your income fluctuates, and adjust your savings accordingly. If you have a Plan 1 loan with a small balance, voluntary overpayments could clear the debt faster. However, for Plan 2 loans with large balances and the 30-year write-off, overpaying may not be financially advantageous since the remainder will eventually be written off.

Finally, check your plan type with the Student Loans Company. Getting this wrong on your tax return means calculating the wrong threshold and potentially paying the wrong amount.

Sign up for Accounted and let Penny take the guesswork out of student loan repayments. With real-time projections and clear estimates built into your dashboard, you will always know where you stand, and you can focus on growing your business rather than worrying about what you owe.

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