Launch of Student Loan Plan 5
16th February 2026
From April 2026 a new student loan, Plan 5 will be implemented. The plan applies to both undergraduate and postgraduate courses beginning on or after August 1st, 2023.
The loan will sit alongside the existing plans 1,2 and 4 paid at a rate of 9% on earnings over £25,000. The plan can run for 40 years before it can be written off and interest is to be charged at RPI (rate of inflation) in order to prevent the repayment exceeding the original loan.
HMRC are launching an updated New Starter Checklist that will include a Plan 5 option. In the meantime, if an employer is unsure what plan to use, they should default to Plan 1 until advised otherwise.
For reference, different plans have different thresholds as listed below. All plans, except for a Postgraduate loan, pay 9% on earnings above the threshold. Postgraduate loans are re-paid at 6%. Payments are recovered via the payroll and paid across to HMRC as part of the PAYE liability return.
Plan 1 – £26,900
Plan 2 – £29,385
Plan 4 – £33,795
Plan 5 – £25,000
Postgrad loan – £21,000
