Quick answer
If you are self-employed or have other untaxed income, student loan repayments are calculated on your Self Assessment return and paid with your tax bill. You repay a percentage of income above the plan threshold, and there is no separate payment process.
Updated October 2026 · Figures based on 2026/27 rates
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How student loan repayments work through Self Assessment
If you have a student loan and a Self Assessment return, HMRC works out any repayment due through the return. Employees normally repay through payroll, but the self-employed, landlords and anyone with other income outside PAYE settle the balance on 31 January with their tax. The repayment is a percentage of your income above the threshold for your plan. For Plan 1, Plan 2, Plan 4 and Plan 5 loans the rate is 9%, and for a postgraduate loan it is 6%. Thresholds change, so check GOV.UK’s guide to repaying your student loan for the figure that applies to your plan and tax year.
The calculation is based on your income for the tax year, which for most people includes salary, self-employed profit and rental profit, rather than only your trading profit. It is entered on your return, and the amount due is added to your tax bill. It is not a tax in the strict sense, but it is collected in the same way and on the same dates, and it can also be included in payments on account.
Worked example: salary plus freelance profit
This is an illustrative example. To keep the arithmetic simple, assume a Plan 2 threshold of £28,000. This is not an official figure, so substitute the real one for your own calculation.
- Salary of £30,000 taxed through PAYE, and freelance profit of £10,000, so total income is £40,000.
- Income above the assumed threshold: £40,000 − £28,000 = £12,000.
- Repayment at 9%: £12,000 × 9% = £1,080.
- Payroll has already deducted 9% of the £2,000 of salary above the assumed threshold: £2,000 × 9% = £180.
- Balance due through Self Assessment: £1,080 − £180 = £900.
| Step | Amount |
|---|---|
| Total income | £40,000 |
| Less assumed threshold | £28,000 |
| Income subject to 9% | £12,000 |
| Total repayment | £1,080 |
| Already paid through payroll | £180 |
| Due through the return | £900 |
That £900 sits on top of any income tax and Class 4 National Insurance on the freelance profit. Many people are surprised by how large the first 31 January bill is for exactly this reason. Our first-year self-employed guide explains how to plan for it.
Why the repayment can look high in a first year
When you start freelancing alongside a job, income tax and student loan repayments on the new income are not deducted at source. In the first return you pay the full year’s balance, and if your bill was over £1,000 you will usually also need to make payments on account for the following year, which include the student loan element. Payments on account are due on 31 January and 31 July. You can read more in our guide to reducing payments on account if your income has fallen.
Common mistakes with student loans and tax returns
- Not ticking the student loan box or selecting the wrong plan on the return, so the repayment is understated.
- Using trading profit alone and ignoring other income in the calculation.
- Assuming payroll deductions have settled everything when you also have untaxed income.
- Forgetting that a postgraduate loan is separate and is repaid at 6% alongside an undergraduate loan.
- Missing the repayment in cash planning, then struggling on 31 January.
Checklist before you file
- Confirm which plan or plans you have from your student loan account.
- Gather your P60 and payslips to see how much was deducted through payroll.
- Total your self-employed or rental profit for the tax year.
- Check the current thresholds in HMRC guidance.
- Set aside money for 31 January, including payments on account.
Our Self Assessment for sole traders service includes the student loan section of the return, so the figures are entered correctly. SATR offers a fixed fee from £199 + VAT, with qualified UK accountants filing online. See also our explanation of the £12,570 Personal Allowance.
This is general information, not personal tax advice.
Special situations to be aware of
Starting or stopping self-employment mid-year
Payroll deductions stop if you leave a job part-way through a tax year, but your repayment is still assessed on the income for the whole year. If you have a gap in employment, you may find that deductions already taken are higher or lower than the final figure, and the return corrects the difference either way. If you overpaid, you can usually ask HMRC for a refund of the excess or contact your loan provider.
Rental and investment income
For landlords, rental profit counts as income for the repayment calculation, so a loan holder who also lets out a property will see a higher repayment through the return than payroll alone would suggest. Interest and dividends may also count. Our landlord service page explains how the rental pages of the return fit together.
Keeping your records straight
Log in to your student loan account at least once a year to check your plan type and balance. Having the correct plan on your return matters, because different plans use different thresholds. Keep statements with your tax records for five years after the 31 January deadline, and if you are unsure which plan applies to you, check current HMRC guidance or ask your loan provider.
Frequently asked questions
What if I have a job and self-employed income?
Your employer deducts repayments from salary and Self Assessment adds a repayment on your other income.
Can I overpay?
HMRC recalculates and adjusts, and any refund of an overpayment is handled by the Student Loans Company.
Do I repay my student loan twice if I am employed and self-employed?
No. Payroll deductions and your Self Assessment repayment are reconciled on the return, so you only repay the total due for the year.
Is the repayment based on profit or turnover?
It is based on income for the tax year, using profit for self-employment rather than turnover. Check current HMRC guidance for exactly which income counts.
What happens if I have a postgraduate loan as well?
A postgraduate loan is repaid separately, at 6% of income above its own threshold, in addition to any undergraduate plan repayments.
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The Bottom Line
If you have a student loan and untaxed income, the repayment is calculated on your Self Assessment return at 9% of income above your plan threshold (6% for postgraduate loans) — on top of your tax bill. Tick the right plan box, include all your income, and budget for the extra amount so 31 January does not catch you out.
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