Student Loan Calculator for Contractors — Plan 1/2/4/5 (2026/27)
Calculate your student loan repayment as a UK contractor. Enter your contract rate, IR35 status, and student loan plan to see your annual repayment amount and take-home pay after the deduction. Compare all four plans side by side and understand how your IR35 status affects your student loan. Updated for the 2026/27 tax year.
| Plan | Threshold | Rate | Annual repayment |
|---|---|---|---|
| Plan 1 (pre-2012) | £24,375 | 9% | £0 |
| Plan 2 (2012–2023) | £27,295 | 9% | £0 |
| Plan 4 (Scotland) | £31,395 | 9% | £0 |
| Plan 5 (post-2023) | £25,000 | 9% | £0 |
How to Use This Calculator
See your student loan repayment as a contractor in three simple steps.
Enter Your Contract Details
Set your day rate, working pattern (days per week and weeks per year), and select your IR35 status. Most contractors work 46 weeks per year after accounting for holidays. The gross annual income updates automatically as you adjust the sliders.
Choose Your Student Loan Plan
Select your student loan plan from the dropdown — Plan 1, Plan 2, Plan 4 (Scotland), or Plan 5. Not sure which plan you are on? Check your student loan statement or HMRC account. The repayment threshold and rate for each plan are shown in the comparison table.
Review Your Repayment & Take-Home
See your annual student loan repayment, take-home pay after the deduction, and a side-by-side comparison of all four plans. The breakdown panel shows exactly where every pound of your contract income goes, including the student loan deduction.
Student Loan Plans Explained
Understanding the four student loan plans for UK contractors in 2026/27.
Plan 1 (Pre-2012)
Applies to students who started their course before 1 September 2012 in England or Wales.
- Repayment threshold: £24,375/year
- Repayment rate: 9% of income above threshold
- Interest rate: 1.25% (Bank of England rate + 0.25%)
- Loan written off after 25 years (or at age 65 for older loans)
Plan 2 (2012–2023)
Applies to students who started between 1 September 2012 and 31 July 2023 in England or Wales.
- Repayment threshold: £27,295/year
- Repayment rate: 9% of income above threshold
- Interest rate: RPI + up to 3% (variable by income)
- Loan written off after 30 years
Plan 4 (Scotland)
Applies to Scottish students regardless of when they started their course.
- Repayment threshold: £31,395/year
- Repayment rate: 9% of income above threshold
- Interest rate: 1.25% (fixed, RPI-linked)
- Loan written off after 30 years (or at age 65)
Plan 5 (Post-2023)
Applies to students who started on or after 1 August 2023 in England.
- Repayment threshold: £25,000/year
- Repayment rate: 9% of income above threshold
- Interest rate: RPI (variable)
- Loan written off after 40 years
How Student Loan Repayments Work for Contractors
The rules differ depending on your IR35 status and how you operate.
Inside IR35 / Umbrella Company (PAYE)
If you work inside IR35 through an umbrella company or are deemed an employee, student loan repayments are handled through the PAYE system. Your umbrella company or deemed employer calculates the repayment based on your gross employment income at 9% above the relevant plan threshold. The repayment is deducted automatically from your salary before you receive your net pay, just like income tax and National Insurance. The deduction appears as a separate line item on your payslip. You do not need to do anything additional on your tax return — the repayment is already accounted for through your payroll.
Outside IR35 (Limited Company)
If you operate through your own limited company outside IR35, student loan repayments are calculated only on the salary you draw from your company. Dividends are not treated as earnings for student loan purposes. Since most outside IR35 contractors optimise by taking a salary at or below the personal allowance (£12,570), the salary typically falls below all student loan thresholds, meaning your student loan repayment is usually zero. If your total employment income (salary from your company plus any other employment) exceeds the threshold, you must report the repayment on your Self Assessment tax return and pay it directly to HMRC.
Multiple Income Sources
If you have multiple contracts or a mix of employment and self-employed income, HMRC aggregates all your relevant income to determine whether you exceed the student loan threshold. For PAYE income, the repayment is deducted by each employer based on that specific employment. If you have self-employed income as well, the total repayment is reconciled through your Self Assessment. It is your responsibility to ensure the correct total amount is paid across all income sources.
What Happens When You Repay Your Loan
Once you have repaid your student loan in full, HMRC will notify you to stop making repayments. Your umbrella company or employer should also receive a notification to stop deductions. If you work through a limited company, you simply stop including the repayment in your Self Assessment. It is important to keep HMRC updated with your current address and contact details so they can notify you when your loan is fully repaid. Overpayments can be reclaimed from the Student Loans Company.
Worked Example
A senior IT contractor on £650/day, 5 days/week, 46 weeks/year inside IR35 on Plan 2 student loan with 5% pension.
| Item | Amount |
|---|---|
| Gross annual income | £149,500 |
| Employer NI (15%) | −£21,675 |
| Apprenticeship levy (0.5%) | −£748 |
| Pension contribution (5%) | −£7,475 |
| Income tax | −£38,360 |
| Employee NI (8%/2%) | −£4,552 |
| Student loan repayment (Plan 2) | −£10,125 |
| Net annual take-home | £66,565 |
| Plan | Threshold | Annual repayment |
|---|---|---|
| Plan 1 (pre-2012) | £24,375 | £11,261 |
| Plan 2 (2012–2023) | £27,295 | £10,125 |
| Plan 4 (Scotland) | £31,395 | £10,629 |
| Plan 5 (post-2023) | £25,000 | £11,205 |
Repayment Thresholds — 2026/27
All student loan plans use a 9% repayment rate on income above the annual, monthly, or weekly threshold.
| Plan | Annual threshold | Monthly equivalent | Weekly equivalent | Rate |
|---|---|---|---|---|
| Plan 1 (pre-2012) | £24,375 | £2,031 | £469 | 9% |
| Plan 2 (2012–2023) | £27,295 | £2,274 | £525 | 9% |
| Plan 4 (Scotland) | £31,395 | £2,616 | £604 | 9% |
| Plan 5 (post-2023) | £25,000 | £2,083 | £481 | 9% |
Assumptions and Limitations
This calculator provides illustrative estimates based on published HMRC thresholds and rates. Your individual circumstances may differ.
Student Loan Assumptions
- Plan 1 threshold: £24,375/year (9% rate)
- Plan 2 threshold: £27,295/year (9% rate)
- Plan 4 threshold: £31,395/year (9% rate)
- Plan 5 threshold: £25,000/year (9% rate)
- All rates for tax year 2026/27
- Repayment calculated on gross employment income before pension sacrifice
IR35 Scenario Assumptions
- Inside IR35: Student loan calculated on salary after employer NI and levy deductions
- Outside IR35: Student loan based on salary from limited company only (not dividends)
- Outside IR35: Assumes optimal salary of £12,570 (below all thresholds, zero student loan)
- No other employment income or benefits in kind
- Standard personal allowance (no high-income taper applied)
Tax & NI Assumptions
- Personal allowance: £12,570 (2026/27)
- Basic rate 20%: £12,571–£50,270
- Higher rate 40%: £50,271–£125,140
- Additional rate 45%: over £125,140
- Scottish bands: Starter 19%, Basic 20%, Intermediate 21%, Higher 42%, Top 48%
- Employer NI: 15% above £5,000/year
- Employee NI: 8% / 2% thresholds
Key Limitations
- No marriage allowance or spouse salary/dividend splitting
- No VAT, R&D credits, or capital allowances considered
- Student loan interest rates not modelled (repayment amount only)
- Loan write-off periods not factored into calculations
- Previous loan balance and remaining term not considered
- Does not account for postgraduate loans (Plan 3)
Student Loan FAQ for Contractors
Common questions about how student loan repayments work for UK contractors in 2026/27.
Yes, contractors must pay student loan repayments on income above the relevant threshold, just like any other employee or self-employed person. If you work inside IR35 through an umbrella or deemed employer, repayments are deducted automatically via PAYE. If you operate through your own limited company outside IR35, student loan repayments are based only on your salary (not dividends), and you report them through Self Assessment.
Plan 1 applies to students who started their course before 1 September 2012 in England or Wales, with a repayment threshold of £24,375/year. Plan 2 applies to those who started between 1 September 2012 and 31 July 2023 in England or Wales, threshold £27,295/year. Plan 4 is for Scottish students (any start date), threshold £31,395/year. Plan 5 applies to students who started on or after 1 August 2023 in England, threshold £25,000/year. All plans charge 9% on income above the threshold.
Student loan repayments for limited company contractors are calculated on your salary only, not your dividends. HMRC does not treat dividends as earnings for student loan purposes. Since most outside IR35 contractors take a minimal salary (typically up to the personal allowance of £12,570, which is below all student loan thresholds), student loan repayments are usually zero for limited company contractors. However, if you take a salary above the threshold through your payroll, you must repay through your Self Assessment.
Umbrella company contractors are treated as employees for tax purposes, so student loan repayments are deducted from your gross employment income through PAYE before you receive your net pay. Your umbrella company calculates the repayment at 9% of your income above the relevant plan threshold and sends it directly to HMRC through your payroll. The deduction appears on your payslip alongside income tax and National Insurance. You do not need to do anything on your Self Assessment for this income.
For the 2026/27 tax year, the repayment thresholds are: Plan 1 — £24,375 per year (£2,031/month, £469/week), Plan 2 — £27,295 per year (£2,274/month, £525/week), Plan 4 (Scotland) — £31,395 per year (£2,616/month, £604/week), Plan 5 (post-2023) — £25,000 per year (£2,083/month, £481/week). All plans use a 9% repayment rate on earnings above the threshold. These thresholds are fixed for 2026/27 unless announced otherwise in the Budget.
Your student loan plan is determined by where you lived when you started your course and the type of loan you received, not where you currently work. If you received a Plan 1 or Plan 2 loan and move to Scotland to work, your plan type does not change. However, if you are a Scottish student who studied in Scotland, you will be on Plan 4 regardless of where you work. You cannot voluntarily switch plans — your plan is fixed based on your loan agreement. The calculator allows you to compare all plans so you can see the difference regardless of your situation.
For inside IR35 and umbrella contractors, student loan deductions appear as a line item on your payslip from your umbrella company or deemed employer, listed separately from income tax and National Insurance. The deduction is labelled "Student Loan Repayment" or similar. For limited company contractors outside IR35, you report your student loan repayment on your Self Assessment tax return (box 3 on the student loan repayment page, SA100) and pay it directly to HMRC. The repayment is calculated based on your salary from the company, not your dividend drawings, and your accountant can advise on the correct calculation.