Student Loan Repayments When You Are Self-Employed
When you work for an employer, student loan repayments come out of your pay automatically. When you are self-employed, they are worked out through your Self Assessment return and paid with your tax bill, often in one lump. This guide explains how student loan repayments work for UK sole traders and freelancers and how to plan for them. It is general information, not financial or tax advice.
Key takeaways
- If you are self-employed, student loan repayments are calculated through your Self Assessment return.
- You repay 9% of income above your plan's threshold, or 6% for a Postgraduate Loan.
- Repayments are due with the 31 January balancing payment and are not included in payments on account.
- Thresholds depend on your plan and change, so check your plan and the current figure on GOV.UK.
- Saving a share of every payment you receive avoids a painful January.
Student loans in the UK are repaid based on income, not on a fixed monthly schedule. If your income is below your plan's threshold, you repay nothing that year. If it is above, you repay a percentage of the amount over the threshold. That principle is the same for employees and the self-employed. What changes is how and when the money is collected.
For freelancers, sole traders and contractors, the difference matters because the repayment arrives as part of a bigger Self Assessment bill. If you have not planned for it, it can come as a shock.
How student loan repayments work for the self-employed
When you file your Self Assessment return, you tell HMRC that you have a student loan and which plan type you are on. HMRC then calculates the repayment due for that tax year based on your income and adds it to your tax calculation. You pay it along with your Income Tax and National Insurance.
The income used is broadly your total income for the tax year as shown on your return, which can include self-employed profits, employment income and some other income. The exact rules on which income counts can be detailed, so check GOV.UK if you have unearned income such as savings interest or rental profits.
Which plan are you on?
There are several plan types, including Plan 1, Plan 2, Plan 4, Plan 5 and the Postgraduate Loan. Which one you have depends on where you lived when you took out the loan, when your course started and what type of course it was. Each plan has its own repayment threshold, and those thresholds can change from one tax year to the next.
If you are not sure which plan you are on, check your online account with the Student Loans Company or contact them. It is common to have more than one loan, for example an undergraduate plan and a Postgraduate Loan, and you may repay both at the same time.
Common mistake
Forgetting to tick the student loan box on your Self Assessment return, or choosing the wrong plan type. This can lead to the wrong repayment, and the error has to be corrected later. Check your plan before you file, every year.
When the money is due
This is the part that catches people out. Student loan repayments for the self-employed are paid with the balancing payment on 31 January after the end of the tax year. They are not spread through the year and they are not included in payments on account.
Payments on account cover Income Tax and Class 4 National Insurance only. That can make your January bill look very different from your July bill, and it means the full student loan amount for a year lands in one go.
| Item | Included in payments on account? | When it is paid |
|---|---|---|
| Income Tax | Yes | Payments on account plus balancing payment |
| Class 4 National Insurance | Yes | Payments on account plus balancing payment |
| Student loan repayment | No | Balancing payment on 31 January |
| Capital Gains Tax | No | Balancing payment on 31 January |
Remember that the tax year runs from 6 April to 5 April. Income you earn between 6 April 2026 and 5 April 2027 feeds into a student loan repayment due on 31 January 2028. That gap gives you time to save, as long as you actually do it.
A simplified example
The numbers below are made up to show the method. They do not use a real plan threshold, and they ignore other income, Scotland and other details. Check your own plan threshold on GOV.UK.
Example
Imagine a freelance web developer whose total income for the tax year is £40,000, and suppose (for this example only) that her plan's threshold were £25,000. Her income above the threshold is £15,000. At 9%, her student loan repayment for the year would be £1,350. Because it is not part of her payments on account, the full £1,350 is added to her balancing payment on 31 January, on top of any Income Tax and National Insurance still due.
The point of the example is not the exact figure. It is that the repayment is a predictable percentage of income above a threshold. Once you know your plan's threshold, you can estimate it yourself and save for it during the year.
If you are employed and self-employed at the same time
Many freelancers also have a part-time or full-time job. In that case your employer deducts student loan repayments through PAYE based on your salary, and Self Assessment then works out the total due on all your income for the year.
- Repayments through PAYE count. Amounts already deducted by your employer are taken into account in your Self Assessment calculation.
- Your side income can push you over. Even if your salary alone is below your threshold, adding freelance profit may mean a repayment is due through Self Assessment.
- Check your payslips. Make sure your employer is using the right plan type. If not, tell your employer and the Student Loans Company.
Pro tip
Keep a note of the total student loan deductions shown on your payslips or P60. When you complete your return, compare them with what HMRC's calculation assumes. Spotting a mismatch early saves a long correction process later.
How to plan for student loan repayments
Because the repayment arrives in one lump with your January bill, planning is mostly about saving regularly. A simple approach works for most freelancers.
- Confirm your plan type and threshold. Look up the current threshold for your plan on GOV.UK at the start of each tax year.
- Estimate your income for the year. Use your bookkeeping figures so far and a realistic forecast for the rest of the year.
- Calculate the likely repayment. Take income above the threshold and multiply by 9%, or 6% for a Postgraduate Loan.
- Add it to your tax savings. Move a share of every payment you receive into a separate savings account that covers tax, National Insurance and student loan.
- Review mid-year. If your income is higher or lower than expected, adjust the amount you set aside.
Saving is especially important if your income is rising. The repayment for a strong year is due in a later January, by which time you may have spent the money unless you set it aside.
Common questions about repaying more or less
Freelancers often ask whether they can reduce their repayments or should repay faster. The answer depends on your plan and your wider finances, so this section only covers the general principles.
Voluntary extra repayments
You can usually make voluntary repayments directly to the Student Loans Company. Whether that is sensible depends on your plan's interest, how likely you are to repay the loan in full before it is written off and your other priorities, such as an emergency fund, pension saving or paying off more expensive debt. This is a personal decision, and a regulated financial adviser can help if you are unsure.
Low income years
If your income for a tax year is below your plan's threshold, no repayment is due for that year. Self Assessment handles this automatically when you report your income correctly.
Moving abroad
If you move overseas, different rules apply and you need to tell the Student Loans Company. Do not assume repayments stop because you no longer file a UK return.
Your student loan checklist
- Check which plan type or types you have
- Look up this tax year's threshold for each plan on GOV.UK
- Tick the student loan box and choose the right plan on your return
- Include student loan in your tax savings percentage
- Remember it is paid with the 31 January balancing payment
- Compare PAYE deductions with your Self Assessment calculation if you also have a job
- Keep your Student Loans Company account details up to date
Frequently asked questions
Do I pay student loan through payments on account?
No. Payments on account cover Income Tax and Class 4 National Insurance. Student loan repayments are paid in full with the balancing payment on 31 January after the end of the tax year.
Is the repayment based on turnover or profit?
For self-employment, it is based on your profit rather than your turnover, together with other income on your return. Claiming all your allowable expenses therefore matters for your student loan as well as your tax.
What if I have an undergraduate loan and a Postgraduate Loan?
You can repay both at the same time: 9% above your undergraduate plan's threshold and 6% above the Postgraduate Loan threshold. Tell HMRC about both on your return.
Who should I contact if my repayments look wrong?
For Self Assessment calculations, contact HMRC. For your loan balance, plan type or overpayments, contact the Student Loans Company. An accountant can also review your return.
Related reading
The bottom line
As a self-employed person, you repay your student loan through Self Assessment: 9% of income above your plan's threshold, or 6% for a Postgraduate Loan, paid with the 31 January balancing payment. Because it is not part of payments on account, the full amount arrives at once, so include it in the money you set aside for tax throughout the year.
This is general information, not financial or tax advice. Thresholds and rules change every tax year, so check the current figures for your plan on GOV.UK, and speak to HMRC, the Student Loans Company or an accountant if you are unsure.
