The basic calculation
For any plan, the calculation has the same shape:
Annual view: (annual gross income − annual threshold) × rate = annual deduction
Per-period view: (period gross income − period threshold) × rate = period deduction
The period threshold is just the annual threshold divided by your pay frequency (12 for monthly, 52 for weekly, 13 for 4-weekly).
The deduction is rounded DOWN to the nearest pound per period before being applied.
Step-by-step for any plan
- Identify your plan(s) — check your Student Loans Company account at online.slc.co.uk
- Find your threshold — see student loan thresholds →
- Calculate threshold-relevant income — gross minus salary sacrifice and net-pay pension contributions
- For each plan:
- If threshold-relevant income ≤ threshold: deduction = £0
- If threshold-relevant income > threshold: deduction = (income − threshold) × rate
- Sum across plans — Plan-1-or-2-or-4-or-5 uses the lower threshold if multiple; PGL is always additive
Worked example 1 — straightforward Plan 2
£35,000 salary, Plan 2, no pension, no other complications
- Threshold-relevant income: £35,000
- Above Plan 2 threshold (£28,470): £6,530
- 9% × £6,530 = £588/year
Monthly: £49 (after period-rounding)
Worked example 2 — Plan 2 + PGL
£40,000 salary, Plan 2 + PGL
Plan 2: - Above £28,470 = £11,530 × 9% = £1,038/year
PGL: - Above £21,000 = £19,000 × 6% = £1,140/year
Combined annual: £2,178
Monthly: roughly £181 combined.
Worked example 3 — salary sacrifice reduces deduction
£30,000 salary, Plan 2, 6% salary sacrifice (£1,800 to pension)
Threshold-relevant income: £30,000 − £1,800 = £28,200 - Below Plan 2 threshold (£28,470) → £0 student loan
Compared to no sacrifice (where deduction would be £138/year), the £1,800 sacrifice eliminates the deduction and goes to pension. Net cost to take-home: roughly £1,160 (after Income Tax + NI saved on the sacrificed amount).
Worked example 4 — bonus month spike
£36,000 base salary, Plan 2, plus a £6,000 bonus paid in October
Base monthly: £3,000
October pay period: - £3,000 + £6,000 = £9,000 gross for October - Monthly threshold: £2,372.50 - Above threshold: £6,627.50 - 9% × £6,627.50 = £596.48 → rounds to £596 student loan deduction in October
Normal monthly deduction (£36,000 / 12 = £3,000, above £2,372.50 by £627.50): 9% × £627.50 = £56
So October has a £540 spike compared to normal months. November onwards returns to ~£56/month.
This is the "bonus month" effect — important to know if a bonus or PILON would land you with a much higher student loan deduction than the annualised average.
Worked example 5 — Plan 4 (Scotland) + PGL
£45,000 salary, Plan 4 + PGL
Plan 4: - Above £32,745 = £12,255 × 9% = £1,103/year
PGL: - Above £21,000 = £24,000 × 6% = £1,440/year
Combined annual: £2,543
This is the same combined rate (15% above both thresholds) you'd see with Plan 2 + PGL — the difference is just where each threshold kicks in.
Worked example 6 — variable pay (commission-heavy job)
£25,000 basic + variable commission, Plan 2
If your commission varies wildly month-to-month, your deductions will too:
- Month with £2,000 base only: below £2,372.50 monthly threshold → £0 deduction
- Month with £2,000 + £800 commission: £2,800 gross → £427.50 above period threshold → £38 deduction
- Month with £2,000 + £3,000 commission: £5,000 gross → £2,627.50 above period threshold → £236 deduction
Annual total depends on the exact distribution. Use the take-home calculator with your average month for a working estimate.
Self Assessment vs PAYE — when annual matters
If you're employed (PAYE only), your deductions are settled per pay period. There's no annual reconciliation — what's deducted is what's owed.
If you have additional income (self-employment, large investment income above the threshold), Self Assessment reconciles at year-end:
- HMRC's annual SA calculation looks at total income across all sources
- If your PAYE deduction was less than the SA calculation requires, you owe additional student loan in the SA bill
- If your PAYE deducted more than the SA calculation says was due, you get a refund
For pure-PAYE workers, this never happens. For multi-source income workers, the annual SA reconciliation matters.
Common calculation errors
- Using gross salary when salary sacrifice applies — use post-sacrifice income for threshold check
- Using annual figure for monthly deduction — divide by 12 for the monthly equivalent
- Forgetting PGL is separate — it doesn't combine with undergrad threshold
- Including benefits in kind in income — they don't count for student loan threshold
- Assuming Plan 1 + Plan 2 means 18% — it means 9% above the lower threshold
The take-home calculator handles all of these automatically — running your inputs through it is faster than manual calculation.
Calculator vs manual — when to use which
Use the take-home calculator → when: - You want the full picture (Income Tax + NI + student loan combined) - You have multiple plans - You're testing salary sacrifice scenarios - You want monthly + annual + period-by-period views
Calculate manually when: - Sanity-checking the calculator - Validating a payslip against expected - Modelling a specific bonus or one-off scenario - Understanding the mechanics behind the deduction
The maths is straightforward; the calculator just removes the rounding and multi-plan bookkeeping.
In short
UK student loan repayment is (threshold-relevant income − annual threshold) × rate, applied per pay period. Plan 2: 9% above £28,470. Plan 5: 9% above £25,000. PGL: 6% above £21,000. Plus additive PGL if applicable. Salary sacrifice reduces threshold-relevant income. Bonus months produce spikes. For step-by-step calculation, follow the examples above; for instant results, use the take-home calculator →. For the full reference, see the student loans hub →.