Introducing Student Loan Plan 5
Post Author:
Rona Burns
Date Posted:
October 27, 2025
Share This:
Categories:
Introducing Student Loan Plan 5
HMRC has announced the introduction of a new student loan repayment plan – Plan 5. This new plan will come into effect from 6th April 2026.
What is Plan 5?
Plan 5 will operate similarly to existing student loan plans (Plans 1,2 and 4) with a few distinct features:
- Repayments start: 6th April 2026
- Threshold: £25,000 per year (approximately £2,083 per month or £480 per week)
- Repayment rate: 9% of earnings above the threshold
- Eligibility: Plan 5 only applies to students who applied to Student Finance England and began their courses from August 2023 onwards
What Employers Need to Do
Starting March 2026, employers will begin receiving student loan notices for Plan 5. These notices will state when deductions should begin.
Payroll teams should keep in mind:
- You can only deduct one student loan plan at a time – Plan 1, 2, 4 or 5
- You can deduct a postgraduate loan alongside one student loan plan type
- Ensure your payroll software is updated to accommodate Plan 5 from April 2026. Software developers are already working on necessary updates
More information on student loan and postgraduate loan repayment guidance for employers is available on the HMRC website.
If we process your payroll, our Payroll Team at Johnston Smillie are always happy to answer any questions you may have on this subject.
Photo by Element5 Digital on Unsplash
