Student Loan Repayments in 2026: What You and Your Employees Need to Know

If your business employs graduates who started university between September 2012 and July 2023, a significant payroll change is coming this April — and another one is already locked in until 2030.

What's changing in April 2026?

The Plan 2 repayment threshold rises from £28,470 to £29,385 per year. That sounds like good news for employees — and in the short term, it is. But the Autumn 2025 Budget confirmed that this new threshold will then be frozen until April 2030. With inflation continuing to erode real wages, more employees will effectively pay more in student loan repayments over time — even without a formal rate increase.

The thresholds have moved again. Here's a plain-English breakdown of what changes, and what it means for your payslip.

What this means in practice for employers:

• Payroll accuracy is critical — PAYE systems must reflect the new April 2026 thresholds from day one of the new tax year. An incorrect threshold applied for even one month creates cumulative errors

• Bonus and commission payments can temporarily push employees above thresholds, triggering unexpected deductions that employees will query

• Employees with multiple income sources (side income, freelance, rental) may find their annual self-assessment catches underpayments not captured through PAYE​

The employer's blind spot: Most payroll software updates automatically — but many businesses running manual payroll or using older systems apply the wrong plan type to new starters. Misclassifying a Plan 5 employee as Plan 2 is one of the most common payroll errors we see.

Our advice: Use the April 2026 payroll run as a prompt to audit all employee student loan plan types and confirm thresholds are correctly configured. If you're unsure, speak to us before the tax year begins.