FAQ
How do student loans work in payroll?
Five UK plans supported (Plan 1/2/4/5/Postgrad). Set on the employee, applied per-period in pay runs above the plan threshold at the plan rate.
1 min readLast updated 25 May 2026
Plans supported
| Plan | Threshold (FY26-27) | Rate |
|---|---|---|
| Plan 1 | £24,990 | 9% |
| Plan 2 | £27,295 | 9% |
| Plan 4 (Scotland) | £31,395 | 9% |
| Plan 5 | £25,000 | 9% |
| Postgrad (PGL) | £21,000 | 6% |
Plan 1 = pre-2012 England/Wales. Plan 2 = 2012+ England/Wales. Plan 4 = Scotland. Plan 5 = 2023+ (England, parts of Wales). Postgrad runs alongside an undergrad plan.
Setting it up
- Open the employee detail page > Employment tab > Student loans.
- Click Add student loan.
- Pick the plan + effective_from date.
- Save.
An employee can have one undergrad plan + Postgrad simultaneously. The engine applies both rates in the same pay run.
How calculation works
Each pay period:
- Threshold is pro-rated to the period (monthly = annual/12, weekly = annual/52)
- Earnings above the period threshold are taxed at the plan rate
- Independent of PAYE — runs alongside, not on top
Ending a loan
When HMRC tells you the loan is paid off, click End on the row. The effective_to is stamped and from the next pay run onward, no deduction is taken.