Plan 5 Student Loan: When Your First Repayment Actually Starts

What Triggers the First Deduction

Plan 5 applies to most English undergraduates who started their course from August 2023 onwards. Repayment obligations begin the April after you leave your course — whether that's because you graduated, dropped out, or simply reached the end of your studies — provided your income is above the threshold at that point. If your income is below the £25,000 annual threshold in that first April, no repayments are due yet; they start whenever your income later crosses the threshold, assessed via PAYE on a per-pay-period basis.

How the Deduction Is Calculated

The calculation is straightforward once deductions start: your employer deducts 9% of whatever you earn above the relevant pay-period threshold, in the same pay period, alongside Income Tax and National Insurance. For example, a graduate earning £2,500 in a given month would have Plan 5 deductions calculated on the £417 above the £2,083 monthly threshold — 9% of £417 is roughly £37.50 for that month.

The First-Payslip Gap

A common source of confusion for new graduates: your first payslip after starting a job may show no student loan deduction at all, even though your salary is clearly above £25,000 a year. This happens because HMRC's Start Notice to your employer depends on data flowing from the Student Loans Company confirming your course has ended — and that data transfer does not always align perfectly with your actual start date at a new employer. It is not evidence that repayment has been waived. If deductions have not appeared within roughly two to three months of earning above the threshold, it is worth contacting the Student Loans Company to check your account status rather than assuming the gap is permanent.

Self-Assessment and Plan 5

If you're employed and also complete Self Assessment (for example, because of substantial savings interest or a small side income), your student loan repayment obligation on the self-employed or other income portion is reconciled through your tax return rather than PAYE, using the same threshold and rate. This can mean a lump-sum repayment due alongside your Self Assessment balancing payment on top of what's already been deducted from your salary via PAYE — worth budgeting for if you have income outside your main employment.

Why the Threshold Freeze Matters

The £25,000 threshold has not moved since Plan 5 launched, and there is no scheduled increase built into current plans. As salaries rise with inflation and pay progression, more of a graduate's income each year falls above the threshold — meaning a growing share of a Plan 5 borrower's pay packet goes toward repayment over time, even without any change in the headline 9% rate. This is the same fiscal-drag mechanic that affects frozen Income Tax thresholds, just applied to student loan repayment.

Use the calculator below to see exactly how much would come off your specific salary in Plan 5 repayments, alongside Income Tax and National Insurance.