If you are a contractor with a student loan, your reliable umbrella company deducts repayments through PAYE. You do not need to do anything. HMRC tells your umbrella which plan you are on. Deductions start automatically when your earnings cross the threshold.
Does an umbrella company deduct student loan repayments?
Yes. Your umbrella company deducts student loan repayments through PAYE, the same as any employer. HMRC notifies your umbrella of your repayment plan type. Deductions happen every pay period when your earnings exceed your plan’s threshold. Your umbrella has no discretion here. It is a legal obligation.
You will see the deduction clearly on your payslip. Check how to read an umbrella company payslip if you are unsure where to find it.
What are the 2026-27 repayment thresholds?
The 2026-27 thresholds depend on your plan type. Repayments are 9% of earnings above the threshold for Plans 1, 2, 4, and 5. Postgraduate loans use a 6% rate. Deductions are calculated on earnings in each pay period, not your full annual salary in one go.
Here are the current thresholds from 6 April 2026:
- Plan 1: £26,900 annual (£2,241 monthly), 9%
- Plan 2: £29,376 annual (£2,448 monthly), 9%
- Plan 4 (Scotland): £33,795 annual (£2,816 monthly), 9%
- Plan 5: £25,000 annual (£2,083 monthly), 9%
- Postgraduate (Plan 3): £21,000 annual (£1,750 monthly), 6%
If you are on multiple plans, deductions run at the same time. Each one is calculated separately against its own threshold.
Which plan am I on?
Your plan type depends on when and where you studied. Plan 1 covers English and Welsh students who started before 2012. Plan 2 covers those who started from 2012 onwards. Plan 4 applies to Scottish borrowers. Plan 5 is for students who started from August 2023. Postgraduate loans are Plan 3.
Check your Student Finance account or the Student Loans Company to confirm your plan. You can also check your P60 or previous payslips. If your umbrella is deducting on the wrong plan, contact HMRC directly.
How does the deduction appear on my payslip?
The deduction shows as a separate line on your payslip, labelled by plan type. It is taken from your gross pay after tax and National Insurance. It does not reduce your taxable income.
Use the umbrella take home pay calculator to see how deductions affect your net pay. Tax, NIC, and student loan all show separately.
Read the umbrella contractor pay and tax guide for a full pay breakdown.
What if I overpay?
If your umbrella deducts too much, HMRC refunds the overpayment. This happens automatically through the self-assessment process or directly from HMRC. You do not chase the umbrella. HMRC holds the repayment records and issues refunds when your loan balance hits zero or a deduction error occurs.
The most common cause is clearing your loan mid tax year. PAYE keeps deducting until HMRC sends a Stop Notice to your umbrella.
If you believe you have overpaid, contact HMRC’s student loan helpline. Do not expect your umbrella to resolve this. Your umbrella acts on HMRC’s instructions only.
Can my umbrella stop the deductions?
No. Your umbrella must follow HMRC’s instructions on student loan deductions. It cannot pause, reduce, or stop them on your request. Only HMRC can change the instruction.
If your loan is paid off, HMRC sends a Stop Notice to your umbrella. Deductions stop from the date on that notice. Contact HMRC if you have cleared your balance. Ask why no Stop Notice has been issued.
Does DASA handle student loan deductions correctly?
Yes. DASA Umbrella processes student loan deductions through its PAYE payroll in line with HMRC’s instructions. DASA holds dual accreditation from FCSA and Professional Passport. Both bodies independently verify its payroll processes. Deductions are applied accurately every pay period and shown clearly on your payslip.
If you have questions about your deductions, umbrella company, contact the DASA team directly.
Frequently Asked Questions
Does my umbrella company automatically deduct student loan repayments?
Yes. Your umbrella deducts student loan repayments through PAYE based on HMRC’s instructions. You do not need to arrange this yourself.
What is the Plan 2 student loan threshold for 2026-27?
The Plan 2 annual threshold is £29,376 (£2,448 per month) for 2026-27. You repay 9% of earnings above this amount.
What is the Plan 1 student loan threshold for 2026-27?
The Plan 1 annual threshold is £26,900 (£2,241 per month) for 2026-27.
What happens if my umbrella overpays my student loan?
HMRC refunds overpayments directly. Contact HMRC if you think you have been overcharged. Your umbrella acts on HMRC’s instructions and cannot issue refunds itself.
How do I know which student loan plan I am on?
Log in to your Student Finance account or contact the Student Loans Company. Your plan type depends on when and where you studied.
