Student loan deductions from salary
Why did your student-loan deduction change this month? Payroll uses your earnings in each pay period, your loan plan and the relevant 2026/27 threshold.
Why the amount changes
Student-loan deductions through PAYE are calculated against the threshold for each pay period. If your gross earnings rise because of a bonus, overtime or other earnings, the deduction can rise too.
What counts as earnings?
For payroll student-loan purposes, the earnings measure broadly follows the pay used for employer Class 1 National Insurance. That is why genuine salary sacrifice can affect the earnings figure used for student-loan deductions, while ordinary pension deductions taken after the relevant payroll earnings figure may not have the same effect.
2026/27 thresholds
Annual thresholds are £26,900 Plan 1, £29,385 Plan 2, £33,795 Plan 4, £25,000 Plan 5 and £21,000 Postgraduate Loan.
Bonus or overtime month?
A high-pay month can produce a larger deduction even if your normal monthly salary is close to or below the threshold. If your total annual income ultimately falls below your plan's annual threshold, you may be able to request a refund after the end of the tax year.
Related NetSlip tools & guides
FAQs
Are student loan deductions based on gross salary?
They are based on the relevant payroll earnings measure before Income Tax, using the rules for student-loan earnings in each pay period.
Can a bonus increase my student loan deduction?
Yes. Bonuses and overtime can increase earnings in that pay period and therefore increase the deduction.
Can salary sacrifice reduce student loan deductions?
A genuine salary sacrifice arrangement can reduce the earnings figure used for payroll student-loan deductions, depending on the arrangement. Pension scheme rules and wider implications should also be considered.