Yet another student loan plan

Although not strictly a graduate tax, the student loan system effectively is one, as it reduces the take-home pay of those subject to the repayment rules. Repayments may run for several decades, depending on earnings and how much was borrowed.

The Department for Education has introduced a new student loan type: Plan 5. It applies to those who apply for student finance for the first time for a course starting on or after 1 August 2023. For those subject to PAYE, repayments are due to begin from 6 April 2026. For those within self-assessment, it will be 6 April 2027. Plan 5 will be operated and collected in the same way as current plan types 1, 2 and 4, but with an annual repayment starting threshold of £25,000. (This is lower than for the other plans, except for Plan 1).

Note that these rules only apply in England. Other parts of the UK have different systems in place. Please speak to us if you need any help in understanding how student loan repayments need to be processed, or (if you have outstanding student debt yourself) you are unsure of how the repayments will affect you.