Starting 6 April 2026, a new student loan repayment plan, Plan 5, will be introduced by the Department for Education (DfE). This plan will apply to borrowers who began their courses in August 2023 or later and will follow a similar structure to existing Plan types 1, 2, and 4.

Key points to note:

• Repayment Threshold: Repayments will begin when earnings exceed £25,000 per year.
• Repayment Rate: Borrowers will repay 9% of their income above the £25,000 threshold.
• Employer Actions : Employers will start receiving student loan start notices for Plan 5 borrowers from March 2026. Payroll systems will need to be updated by 6 April 2026 to reflect these changes.
• Start of Repayments : The first repayments for Plan 5 will be due from 6 April 2026 for employees under PAYE.

Employers should also remember that only one student loan plan can be deducted at a time (Plan 1, Plan 2, Plan 4, or Plan 5), although postgraduate loans can be deducted alongside any of these plans.

Updated guidance and forms will be available by April 2026 to ensure compliance with the new plan.