The extent of your repayment hinges on your income, encompassing your earnings such as bonuses and overtime, prior to any deductions or taxes.
Your repayment commitment is determined by a portion of your income surpassing the designated 'threshold' for your specific loan variant, with the frequency of your payments aligning with your pay schedule.
These threshold values vary correspondingly across different plan types.
9% of your income over the threshold. The examples show how much you’d repay depending on your income and plan type.
You’re on Plan 1 and have an income of £35,000 a year, meaning you get paid £2,916 each month.
£2,916 – £2,274 (your income minus the Plan 1 threshold) = £642
9% of £642 = £58
This means the amount you’d repay each month would be £58.
You’re on Plan 4 and have an income of £38,000 a year, meaning you get paid £3,166 each month.
£3,166 – £2,833 (your income minus the Plan 4 threshold) = £333
9% of £333 = £30
This means the amount you’d repay each month would be £30.
In the event that your income increases throughout the year, a repayment obligation arises when your earnings surpass the weekly or monthly threshold designated by your plan. This situation might occur, for instance, if you receive additional compensation like bonuses or overtime. If your total annual income falls below the yearly threshold specified by your plan, you retain the option to request a refund at the conclusion of the tax year.
You’ll repay 9% of your income over the lowest threshold out of the plan types you have. You’ll only have a single repayment taken each time you get paid, even if you’re on more than one plan type.
You’re on Plan 1 and Plan 2 and have an income of £28,500 a year, meaning you get paid £2,375 each month. This is over the Plan 1 threshold of £2,274 but under the Plan 2 threshold of £2,458.
You’ll repay 9% of your income over £2,274 a month because that is the lowest threshold out of the plan types you have.
£2,375 – £2,274 (your income minus the lowest threshold) = £101
9% of £101 = £9
This means the amount you’d repay each month would be £9.
If your income went over the Plan 2 threshold, you’d still only repay 9% of your income over the Plan 1 threshold. You would not have to make a separate repayment towards your Plan 2 loan.
If you have more than one job
You’ll only make repayments from jobs where you’re paid over the threshold for your plan type, not your combined income.
You have a Plan 1 loan and you hav1e 2 jobs. Before tax and other deductions, you’re paid £1,200 a month from one job and £700 a month for the other.
You will not have to make repayments because neither salary is above the £2,274 a month threshold.
You have a Plan 2 loan and you have 2 jobs. Before tax and other deductions, you’re paid £2,400 a month from one job and £900 a month for the other.
You will only make repayments on the income from the job that pays you £2,400 a month because it’s above the £2,274 threshold.
If you’re self-employed
HM Revenue and Customs (HMRC) will work out how much you repay each year from your tax return. Your repayments will be based on your income for the whole year.
If you’ve already made repayments from a salary, HMRC will deduct them from the amount you have to repay.