NEW STUDENT LOAN PLAN TYPE — PLAN 5 (EFFECTIVE FROM APRIL 2026)

ASESA Solutions Ltd - NEW STUDENT LOAN PLAN TYPE — PLAN 5 (EFFECTIVE FROM APRIL 2026)

A student loan helps individuals fund their higher education by covering tuition fees and living costs, while a postgraduate loan suppo

rts master’s or doctoral-level study. Repayments begin once the borrower’s income exceeds a set threshold and are automatically deducted through payroll. Currently, student loan repayments are made at 9% of income above each plan’s threshold (e.g., £26,065 for Plan 1, £28,470 for Plan 2, £32,745 for Plan 4), while postgraduate loans are repaid at 6% above £21,000.

Introduction of Plan 5

HMRC has announced that the Department for Education (DfE) is introducing a new student loan Plan type 5, with repayments due to commence from 6 April 2026. This plan applies to students who applied through Student Finance England [government body that manages student loans and grants for higher education in England] and started their courses from August 2023 onwards.

Key Details of Plan 5

• Operated and collected in the same way as Plans 1, 2 and 4.

• First PAYE repayments: from 6 April 2026 (for employed borrowers whose repayments are deducted through payroll).

• First Self Assessment repayments: from 6 April 2027 (for self-employed borrowers or those who repay via their tax return).

• Annual repayment threshold: £25,000.

• Repayment rate: 9% of earnings above the £25,000 threshold.

• Employer notifications (SL1 start notices): expected from March 2026 for borrowers due to enter repayment.

• Applicable to: students who started eligible courses in England from August 2023.

• Payroll software developers are updating systems to accommodate Plan 5 deductions by April 2026.

• Guidance and forms on GOV.UK will be updated ahead of this implementation date.

  
  

Please note:

• Only one student loan plan type can be deducted at a time (Plan 1, 2, 4 or 5).

• A Postgraduate Loan can still be deducted alongside one student loan plan type.

In Summary

The introduction of Plan 5 marks a significant update for borrowers beginning repayment from the 2026–27 tax year. With a new £25,000 threshold and the same 9% repayment rate, the system remains straightforward but introduces changes employers and borrowers should prepare for ahead of April 2026.