Tax and NI
Student loan repayments when self-employed
No payroll means no monthly deduction: HMRC works out the whole year’s repayment from your tax return and adds it to the January bill.
A self-employed graduate on Plan 2 with £40,000 of profit in 2026/27 repays £955: 9 % of the income above the £29,385 threshold. HMRC calculates the amount from the Self Assessment return on the income of the whole year and adds it to the bill due on 31 January. The yearly thresholds for 2026/27 are £26,900 for Plan 1, £29,385 for Plan 2, £33,795 for Plan 4 and £25,000 for Plan 5, all at 9 %, and £21,000 for a Postgraduate Loan at 6 %. If you also have a job, the test uses combined income, and what your employer already deducted comes off. The repayment is never part of payments on account, so it has to be found in full each January on top of any advance. The balance you owe has no effect on the yearly amount, which depends only on income.
Student loan through Self Assessment
Repayment for the year
£955
| Plan threshold | £29,385 |
| Plan repayment | £955 |
| Postgraduate repayment | £0 |
Figures checked by Radif Partners · Editorial policy · How we calculate
Thresholds and rates for 2026/27
The figures below are the yearly thresholds HMRC applies through Self Assessment (GOV.UK, how much you repay). Employees see monthly and weekly versions of them on their payslips; a sole trader only ever meets the annual one.
| Plan | Yearly threshold | Rate | On £30,000 | On £45,000 |
|---|---|---|---|---|
| Plan 1 | £26,900 | 9 % | £279 | £1,629 |
| Plan 2 | £29,385 | 9 % | £55 | £1,405 |
| Plan 4 | £33,795 | 9 % | £0 | £1,008 |
| Plan 5 | £25,000 | 9 % | £450 | £1,800 |
| Postgraduate Loan | £21,000 | 6 % | £540 | £1,440 |
You cannot pick your plan; it follows where and when you applied. GOV.UK puts every borrower who applied to the Student Awards Agency Scotland on Plan 4 and every borrower from Student Finance Northern Ireland on Plan 1. English and Welsh borrowers can be on Plan 1, 2 or 5 depending on when their course started, with Plan 5 the newest. Your online student loan account shows which applies.
One yearly sum, not monthly deductions
For an employee the loan comes out of each pay packet. For the self-employed there is no payroll, so HMRC waits for the return, measures income for the whole year and charges the repayment in one go. GOV.UK says it plainly: repayments are based on your income for the whole year when you file Self Assessment. A seasonal trader, such as a wedding photographer with a busy summer and a dead winter, is therefore treated exactly like someone with a steady income of the same total.
Income here means taxable profit for a sole trader, plus wages and other income on the return. If you also work for an employer, combined income sets the repayment and whatever the employer deducted during the year is taken off. That can mean a repayment through Self Assessment even when neither the job nor the business crossed the threshold alone.
Why January is bigger than you expect
Payments on account cover Income Tax and Class 4 only (GOV.UK, payments on account). The loan sits outside them, so each January you pay the full year’s repayment with the balance, however steady your income. On £40,000 of profit in England, the Self Assessment bill goes from £7,132 without a loan to £8,087 with Plan 2, while the payment on account stays at £3,566 either way. The tax to put aside calculator includes the loan when you choose a plan, which is the simplest way to stop it catching you out.
Interest is added to the balance even in years when your income is under the threshold and nothing is repaid. The yearly repayment, by contrast, does not depend on how much you owe: two people on the same plan and the same profit repay the same amount whatever their balances.
More than one loan
With two undergraduate plans, for example Plan 1 and Plan 2, you repay 9 % of income above the lower threshold, as one amount; GOV.UK then splits it between the loans. A Postgraduate Loan is separate: 6 % above £21,000, charged in addition to any other plan. A freelance researcher with a Plan 2 loan and a master’s loan pays both from the same January bill, which can add noticeably to what is due by 31 January 2028 (GOV.UK, Self Assessment deadlines).