What is Plan 5?

Student Loan Plan 5 is a new UK student loan repayment plan for employees who started their course on or after 1 August 2023. (GOV.UK)

Repayments through payroll (PAYE) begin from April 2026 onwards, once earnings are high enough. 

When do repayments start?

You’ll only start repaying your loan when your income goes above a set threshold.

For Plan 5:

• £25,000 per year

• £2,083 per month

• £480 per week (GOV.UK)

If you earn below this, you don’t pay anything at all.

How much will be deducted?

Repayments are:

• 9% of earnings above the threshold

This works automatically through BrightPay.

Example

• Monthly Salary: £2333.00

• Amount above threshold: £250.00

• Monthly repayment: £270 (9%)

That’s about £22.50 per month  - Round down to £22.00  (GOV.UK)

How it works in BrightPay

From an employee perspective:

• Deductions are taken automatically from payslips

• Only apply to earnings above the threshold

• Calculated each pay period (weekly/monthly)

• Stop and start automatically if pay changes

From an employer/payroll perspective:

• HMRC sends a Start Notice (SL1) when deductions should begin

• Plan 5 works the same way as other student loan plans in PAYE

• Apply the Notice to the Employee directly from the Coding Notice screen. 

  To Manually apply the Student Loan 

  • Go to ‘Employees’ and select the employee’s name.
  • Click on the Tax / NICs / RTI heading.
  • Use the "Student Loan" dropdown to choose the correct Student Loan Plan.
  • Enter a start and stop date if known.

  • Click Save Changes.

     

What’s different about Plan 5?

Plan 5 is designed differently from earlier plans:

• Lower repayment threshold (£25,000) → repayments start sooner

• Same repayment rate (9%) as other plans

• Applies to newer students only (from 2023 onwards)

• First deductions begin April 2026