2026/27 thresholds — at a glance
| Plan | Annual threshold | Monthly | Weekly | Rate |
|---|---|---|---|---|
| Plan 1 | £26,065 | £2,172.08 | £501.25 | 9% |
| Plan 2 | £28,470 | £2,372.50 | £547.50 | 9% |
| Plan 4 | £32,745 | £2,728.75 | £629.71 | 9% |
| Plan 5 | £25,000 | £2,083.33 | £480.77 | 9% |
| Postgraduate Loan (PGL) | £21,000 | £1,750.00 | £403.85 | 6% |
Each plan's deduction = (earnings in this period − period threshold) × rate, rounded DOWN to nearest pound per period.
Per-period equivalents
PAYE doesn't compare annual earnings to the annual threshold. It compares each pay period's earnings to the period equivalent of the threshold.
This matters in two ways:
-
Bonus months: a one-off lump sum in a single month is tested against just that month's threshold. A £10,000 bonus in October could trigger a large student-loan deduction in October alone, even if your steady-state annual income would suggest a much smaller monthly figure.
-
Variable-income workers: contract workers, freelancers paid through PAYE, and sales staff with heavy commission can see student-loan deductions vary month to month based on what each period earns relative to its threshold.
The annualised view (using the annual threshold) is useful for budgeting and steady-state planning. PAYE uses the period view for actual collection.
Historical thresholds — for context
Plan 2 thresholds over time (as an illustrative example):
| Tax year | Plan 2 threshold |
|---|---|
| 2020/21 | £26,575 |
| 2021/22 | £27,295 |
| 2022/23 | £27,295 (frozen) |
| 2023/24 | £27,295 (frozen) |
| 2024/25 | £27,295 (frozen) |
| 2025/26 | £28,470 (increase resumed) |
| 2026/27 | £28,470 (held) |
Note: thresholds were frozen during 2022–2024 as part of student finance reforms, then resumed normal upward movement. The 2026/27 figure is announced and may move again in 2027/28.
How thresholds change annually
The mechanism varies by plan:
- Plan 1: tracks the Retail Price Index (RPI) annually, with government discretion
- Plan 2: tracks the Average Earnings Index (or similar), updated annually; frozen during reform periods
- Plan 4: set by Scottish Government, generally tracks Plan 2 or similar
- Plan 5: frozen at £25,000 until 2027 by policy
- PGL: set at £21,000 and held there since 2016 (no automatic uprating)
Most updates are announced in autumn for the following April.
Multi-plan threshold rules
If you have two undergraduate plans (rare but possible — e.g. Plan 1 + Plan 2 from two different degrees), HMRC applies the lower annual threshold. You pay 9% above that lower threshold.
Example: Plan 1 + Plan 2 borrower: - Plan 1 threshold: £26,065 - Plan 2 threshold: £28,470 - HMRC uses: £26,065 (the lower) - Deduction: 9% above £26,065
The Student Loans Company splits the deduction between your two plans behind the scenes. You don't pay 18%.
PGL is always additive — it has its own threshold and rate, regardless of any undergrad plan you have.
What income counts toward the threshold
Threshold-relevant income includes:
✓ Gross salary ✓ Bonuses (in the period paid) ✓ Overtime ✓ Most other employment income
Does NOT count toward the threshold (these reduce threshold-relevant income):
✗ Salary sacrifice into pension ✗ Net-pay pension contributions ✗ Benefits in kind
Does NOT reduce threshold-relevant income (these are still 100% included):
✗ Relief-at-source pension (comes from net pay) ✗ Voluntary deductions (charity giving via payroll, etc — usually) ✗ Income Tax deducted
The clearest reduction lever is salary sacrifice. Read more about salary sacrifice →
Worked example — comparing thresholds at £35,000
A £35,000 salary against each threshold:
| Plan | Above threshold | Annual deduction |
|---|---|---|
| Plan 1 | £8,935 | £804 (9%) |
| Plan 2 | £6,530 | £588 (9%) |
| Plan 4 | £2,255 | £203 (9%) |
| Plan 5 | £10,000 | £900 (9%) |
| PGL only | £14,000 | £840 (6%) |
For the same salary, different plans produce very different annual deductions. Plan 4 borrowers pay least (highest threshold); Plan 5 borrowers pay most among undergrad plans (lowest threshold).
What happens at exactly the threshold
If your annual income exactly equals the threshold:
- Annual view: £0 deduction
- Per-period view: still £0 (the rounding-down rule ensures any sub-pound at the threshold rounds to zero)
The smallest meaningful deduction usually kicks in when annual income is at least £11–£12 above the threshold (because the period-by-period rounding to integer pounds requires at least £1 of deduction per period to register).
How to verify your threshold and deduction
- Check your payslip — Student Loan or SL line under deductions
- Verify the plan is correct in your Student Loans Company account
- Confirm your annual earnings figure is being used correctly
- Use the take-home calculator → to cross-check
If the payslip deduction doesn't match expected, raise it with your payroll team first. If the plan applied is wrong, contact Student Loans Company.
In short
UK student loan thresholds for 2026/27: Plan 1 £26,065, Plan 2 £28,470, Plan 4 £32,745, Plan 5 £25,000, PGL £21,000. Each plan deducts 9% above its threshold (PGL deducts 6%), calculated per pay period. Annual thresholds divided by 12 for monthly, 52 for weekly. Use the take-home calculator → to model. For the full reference, see the student loans hub →.