Compliance
Student Loan Repayment Thresholds & Plan 5: Employer and Employee Guide
From 6 April 2026, Plan 5 launches with new repayment thresholds—essential to understand for employers, payroll agents, and borrowers.
By NomadicTax Research Team • 5-8 min read • April 10, 2026
## What Is Plan 5?
Plan 5 is a new student loan repayment plan introduced **6 April 2026**. Borrowers under this plan must begin repayments once their earnings exceed a specific threshold. Employers will receive new start notices informing them of the plan type and applicable threshold. ([gov.uk](https://www.gov.uk/government/publications/agent-update-issue-140/issue-140-of-agent-update?utm_source=openai))
## The 2026-27 Thresholds & Rates
| Loan Plan | Earnings Threshold | Repayment Rate |
|----------|---------------------|------------------|
| Plan 1 | £26,900 | 9% of earnings above threshold |
| Plan 2 | £29,385 | 9% |
| Plan 4 | £33,795 | 9% |
| Plan 5 | £25,000 | 9% |
| Postgraduate Loan | £21,000 | 6% |
Rates for plans 1, 2, 4 & 5 remain at **9%**; postgraduate repayments continue at **6%**. ([gov.uk](https://www.gov.uk/government/publications/agent-update-issue-140/issue-140-of-agent-update?utm_source=openai))
## Who Is Affected & When
- All **new Plan 5 borrowers** entering repayment from 6 April 2026.
- Employers/Payroll Agents will receive notifications about which plan employees are on starting March 2026. ([gov.uk](https://www.gov.uk/government/publications/agent-update-issue-140/issue-140-of-agent-update?utm_source=openai))
- Employees unsure of which plan to repay under until informed should use **Plan 1** by default until proper start notice arrives. ([gov.uk](https://www.gov.uk/government/publications/agent-update-issue-140/issue-140-of-agent-update?utm_source=openai))
## Compliance Steps for Employers & Agents
- **Update payroll systems** to handle Plan 5 with its lower threshold of £25,000.
- **Monitor start notices**: beginning in March 2026, to identify plan types for employees.
- **Include plan type in pay records**, so deductions are correct. If employees hold multiple plans, workplace default should be lowest threshold until notice arrives.
- **Communicate to staff**: proactively explain changes so employees aren’t surprised by deductions.
## Example Scenario
Tom earns £30,000/year and holds a Plan 5 loan starting 6 April 2026. He’s above threshold (£25,000), so his deductible repayments will be 9% of £5,000 = **£450**/year. Employer deducts through payroll accordingly. If no start notice received by Tom yet, employer should use Plan 1 default until notified.
## Why It Matters
The lower earning threshold for Plan 5 means employees with lower income will begin repayments sooner. Employers must adjust systems and ensure correct plans to avoid over/under deductions. For employees, knowing your plan type helps with budgeting.
## Actionable Takeaways
- Employers: test payroll software and worker classification modules well ahead.
- Employees: check loan account for plan type; if plan type includes multiple loans, watch thresholds.
- Agents/Advisers: help clients review pay slips and ensure correct deductions from April 2026.