When you’re a self-employed contractor, freelancer or small business owner, sorting out your student loan repayments can feel a bit daunting.
It’s simple enough when you’re an employee – the payment just gets deducted from your wages in the same way as your income tax and National Insurance contributions. But, if you’re responsible for filling out your own Self-Assessment tax return, the process is a little more involved.
To help, we’ve put together this handy guide on how to repay your student loan if you’re self-employed. We’ll look at the different ways the loan repayment is calculated, how to make student loan repayments when self-employed, what to do if you’ve almost paid off your student loan and the link between Self-Assessment tax returns and student loans. Finally, we’ll tell you about how we can help.
How is the student loan repayment amount calculated?
Before we go any further, it’s worth pointing out that your repayment amount will be the same regardless of your employment status. So, you won’t be forced to pay a higher amount just because you’re self-employed.
But how are your loan repayments calculated? Well, it’s different, depending on when and where you took the loan out. Essentially though, once your earnings cross the relevant threshold then your student loan is repayable at the appropriate rate. The below table outlines the various repayment plans.
| Criteria | Rate | Threshold 25/26 | Threshold 26/27 | |
| Plan 1 | Taken before 1 Sep 2012
or in Northern Ireland |
9% | £26,065 | £26,900 |
| Plan 2 | Taken between 1 Sep 2012
and 1 Aug 2023 |
9% | £28,470 | £28,470 |
| Plan 4 | Taken in Scotland including
postgraduate loans |
9% | £32,745 | £33,795 |
| Plan 5 | Taken after 1 Aug 2023
in England and Wales |
9% | – | £25,000 |
| Postgraduate | Masters or doctorate | 6% | £21,000 | £21,000 |
How to make student loan repayments when self-employed
In the same way as an employed person would, self-employed people pay student loans through the tax system – just like with income tax and National Insurance. It comes out automatically, so there’s no separate assessment system to go through.
If you studied full-time, you’ll start repaying in the April following the end of your course – but only once your earnings go above the required threshold.
Studied part-time? Then payments will begin in either the April after you finish the course, or four years after the start of your course whichever comes sooner. Again, this only applies once your earnings cross the threshold.
What to do if you’ve almost paid off your loan
If it looks like you will pay off your student loan within two years, then there’s action you can take to avoid overpaying. When you’re filling in your Self-Assessment tax return, be sure to state that your loan will be paid off in the next two years.
Self-Assessment and student loans
Sorting your Self-Assessment correctly and on-time is vital to avoid penalties and interest on late payment. It is also important to make sure you don’t fall behind on your student loan payments.
Your Self-Assessment tax return (SATR) is due to be filed by 31st January each year, although you can file it any time after the tax year ends and we would suggest getting this done as soon as possible. It’s vital that you submit it by 31st January. Miss this deadline and you could experience fines or penalties.
Getting help with your student loan repayments
If you feel overwhelmed by the facts and figures surrounding student loan repayments for self-employed people, don’t worry – we’re here to help.
Our team of experts can guide you through every aspect of your Self-Assessment tax return, including repaying your student loan. Get in touch to find out how we can help you.