Plan 5 Student Loan Deduction on your Payslip (2026/27)

Plan 5 is the newest student loan repayment plan for undergraduate students from England who started their courses on or after 1 August 2023. Repayments for this cohort officially began being collected through the PAYE system in April 2026.

If you are looking at your payslip and wondering why money is coming out, or if the amount is correct, here is exactly how Plan 5 deductions are calculated.

The 2026/27 Plan 5 Repayment Threshold

The most important thing to understand about Plan 5 is that the repayment threshold is significantly lower than the previous Plan 2.

For the 2026/27 tax year, the Plan 5 threshold is fixed at £25,000 a year. (For comparison, graduates on Plan 2 do not start repaying until they earn £29,385).

Because your employer runs payroll monthly or weekly, they break this annual threshold down into smaller periods:

• Monthly threshold: £2,083
• Weekly threshold: £480

How much will they deduct?

You pay 9% of whatever you earn above the threshold. You do not pay 9% of your total salary.

For example, if your salary is £31,000 a year, your gross monthly pay is £2,583.33.

• Your pay: £2,583.33
• Minus the monthly threshold: -£2,083.00
• Amount subject to deduction = £500.33
• 9% of £500.33 = £45.02

In the Deductions column of your payslip, you will see a line item reading Student Loan or SL Plan 5 for exactly £45.02.

What happens if I get a bonus or work overtime?

Student loan deductions are calculated on a strictly non-cumulative basis. This means the payroll software only looks at exactly what you earned in that specific week or month. It does not care about what you earned earlier in the year.

If your base salary is £24,000 (below the £25,000 threshold), you normally pay £0 in student loans. But if you work £300 worth of overtime in one month, your pay for that month becomes £2,300.

Because £2,300 is above the £2,083 monthly threshold, the payroll software will deduct 9% of the excess (£2,300 - £2,083 = £217 × 9% = £19.53). Even if your total pay for the whole year ends up being less than £25,000, the deduction will still happen in that specific month.

Can I get a refund? Yes. If deductions were taken because of a temporary spike in pay (like a bonus), but your total income at the end of the tax year is below £25,000, you can contact the Student Loans Company (SLC) to request a refund. This does not happen automatically—you must call them.

Can I lower my Plan 5 deductions using Salary Sacrifice?

Yes. Student loan deductions are calculated on your "NIC-able pay" (the amount of your salary that is subject to National Insurance).

If you use Salary Sacrifice to pay into your workplace pension, or to pay for a cycle-to-work scheme or electric car, your official gross salary is reduced. This means your student loan deductions will also decrease. This is one of the hidden benefits of salary sacrifice for young graduates.

Frequently Asked Questions