Student Loan Repayments When You're Self-Employed — A Guide for Tradespeople (2026)

The Key Point: It Goes Through Self Assessment

When you're employed, student loan repayments come out of your wages automatically through PAYE — your employer deducts them and hands them to HMRC, who pass them to the Student Loans Company (SLC). You never have to think about it.

When you're self-employed, there's no employer to do this. So HMRC calculates your student loan repayment as part of your Self Assessment tax return, based on your taxable profits (plus certain other income). It is then added to your tax bill and paid in the same cycle as your Income Tax and National Insurance — the balancing payment due by 31 January, and, where they apply, the payments on account due 31 January and 31 July.

In other words: your student loan, your tax and your Class 4 National Insurance all land together as one Self Assessment bill. That makes budgeting essential, because it's a single larger amount rather than small monthly deductions you barely notice.

Which Plan Are You On?

The amount you repay depends on which loan plan you're on, and that depends on where and when you started your course. Most people don't actively remember their plan type — but it matters, because each plan has a different repayment threshold. You can check yours by logging into your account with the Student Loans Company.

There are five repayment types you might encounter. The thresholds below are approximate and are reviewed every April — treat them as a guide and confirm the current figures before you file:

• Plan 1: generally English/Welsh students who started before September 2012, and Northern Ireland students.
• Plan 2: English/Welsh students who started between September 2012 and July 2023.
• Plan 4: Scottish students (administered by the Student Awards Agency Scotland).
• Plan 5: English students who started a course on or after 1 August 2023.
• Postgraduate Loan: Master's and Doctoral loans in England and Wales — collected separately and at a different rate.

Thresholds and Repayment Rates

For the undergraduate plans (1, 2, 4 and 5) you repay 9% of your income above the threshold. For the Postgraduate Loan you repay 6% above the threshold. Crucially, you only ever pay a percentage of the amount over the threshold — not on your whole income.

If you have both an undergraduate loan and a Postgraduate Loan, both can apply at the same time. That means you could be repaying 9% + 6% = 15% of the relevant income above the respective thresholds.

The figures above are rounded approximations for illustration. Thresholds are updated each April and can differ from these numbers, so check GOV.UK or ask your accountant for the exact threshold for the tax year you're filing.

How It's Worked Out for the Self-Employed

As an employee, your repayments are assessed per pay period — so if you earn over the weekly or monthly threshold equivalent, a deduction is taken that month. The self-employed system is different: it's assessed annually, on your whole year's figures, when you file your return.

HMRC looks at your relevant income for the year — broadly your taxable profit from self-employment plus certain other income (for example, savings or dividend income above set limits, and any employment income). It then takes the amount by which that figure exceeds your plan's threshold and applies your rate (9% or 6%).

So the calculation is simply: (relevant income − threshold) × rate. There's no month-by-month assessment and no concept of a "good month" pushing you over the line — it's the annual total that counts. This is why a busy year of profits will produce a noticeably bigger student loan figure on your Self Assessment, and a lean year may produce none at all if your profit stays under the threshold.

Worked Example: A Sole Trader on Plan 2

Let's say you're a self-employed electrician on Plan 2, with a repayment threshold of £28,000 for the year, and your taxable profit after expenses is £45,000.

• Income above threshold: £45,000 − £28,000 = £17,000
• Student loan repayment: £17,000 × 9% = £1,530 for the year

That £1,530 is added to your Self Assessment bill on top of your Income Tax and Class 4 National Insurance. If you also had a Postgraduate Loan with, say, a £21,000 threshold, you'd add another calculation on the relevant income above £21,000 at 6%: (£45,000 − £21,000) × 6% = £1,440 — making £2,970 in combined student loan repayments for the year. The point is that a single profitable year can produce a four-figure student loan charge you need to have set aside cash for.

Cash Flow: It Lands With Your Tax Bill

Because the repayment is bundled into your Self Assessment, it arrives as part of that one big January payment — not spread across the year. The simplest defence is to treat your student loan like tax: set aside a percentage of every payment you receive into a separate "tax pot" so the money is already there when the bill comes.

A practical rule of thumb is to add the student loan into your overall "set aside for HMRC" figure. Many trades put away roughly 25–30% of profit for tax and NI; if you have a student loan, nudge that up to account for the extra 9% (or more) above the threshold on the relevant slice of income.

Payments on Account — A Common Surprise

Here's where many newly self-employed trades get caught out. If your Self Assessment bill is over £1,000 and most of your tax isn't already collected at source, HMRC asks you to make payments on account — advance payments toward next year's bill, due 31 January and 31 July, each typically half of your previous year's liability.

Student loan repayments are generally not included in the payments on account calculation — they're treated as part of the balancing payment due each 31 January. The upshot is that your January payment can feel especially heavy: it can include last year's balancing tax, last year's student loan, and the first payment on account toward next year's tax, all at once. Knowing this in advance is half the battle — budget for the whole January figure, not just the tax element.

Common Situations

Employed AND Self-Employed

Plenty of trades work a PAYE job and run a side business, or are transitioning from employment to going fully self-employed. If that's you, your student loan can be collected through both routes: deductions via PAYE on your wages, and an additional amount via Self Assessment on your self-employed profits.

HMRC reconciles the two when you file. Your tax return accounts for what was already deducted through PAYE so you're not charged twice on the same income, and any further repayment due on your self-employed earnings is added to your Self Assessment bill. Make sure your return correctly reflects the student loan deductions shown on your P60 or payslips so the reconciliation is accurate.

Nearing the End of Your Loan

When your balance is getting low, the annual Self Assessment system can cause you to overpay — because it collects a year's worth in one go, you might pay off more than you actually owe and have to claim it back later. In the final couple of years of a loan, the Student Loans Company can switch you to direct debit so they take the exact remaining amount in smaller monthly instalments instead. If you think you're close to clearing your loan, contact the SLC to ask about switching — it avoids the hassle of overpaying and reclaiming.

When the Loan Is Written Off

Student loans don't last forever. Any remaining balance is written off after a set period that depends on your plan and when you took the loan out — for some plans this is a number of years after you became liable to repay, for others it's linked to your age. Once your loan is written off or cleared, you stop owing repayments, but you should make sure your accountant knows so the student loan box isn't ticked on your tax return and you don't keep paying. Check your balance with the SLC if you're unsure how close you are.

Practical Tips

• Tell your accountant which plan you're on. The plan type and the fact you have a loan go on the tax return — get it wrong and the calculation will be wrong. If you don't know your plan, your SLC account will tell you.
• Budget for it like tax. Fold the student loan into your "set aside for HMRC" pot so the cash is ready in January and July.
• Check your SLC balance regularly. Especially if you're a few years in — it helps you spot when you're near the end and should switch to direct debit.
• Keep your PAYE records if you're also employed. Accurate P60/payslip figures make the Self Assessment reconciliation correct.
• Verify current thresholds. They change every April — don't rely on last year's number.

Quick Reference: Self-Employed Student Loan Repayments