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openaccountants/skills/uk-student-loan-repayment.md
uk-student-loan-repayment.md396 lines15.7 KB
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1---
2name: uk-student-loan-repayment
3description: >
4 Use this skill whenever asked about UK Student Loan repayment for self-employed individuals. Trigger on phrases like "student loan repayment", "Plan 1", "Plan 2", "Plan 4", "Plan 5", "postgraduate loan", "student loan self-employed", "student loan Self Assessment", "SLC repayment", "student loan deduction", or any question about student loan obligations for a self-employed client. Also trigger when classifying bank statement transactions showing SLC repayments via SA, PAYE student loan deductions, or direct SLC payments. This skill covers Plan 1-5 and Postgraduate Loan thresholds, self-employed SA calculation, multiple plan interaction, bank statement classification patterns, overseas earnings, write-off periods, and edge cases. ALWAYS read this skill before touching any UK student loan repayment work.
5version: 2.0
6jurisdiction: GB
7tax_year: 2025-26
8category: international
9depends_on:
10 - income-tax-workflow-base
11---
12 
13# UK Student Loan Repayment -- Self-Employed Skill v2.0
14 
15## Section 1 -- Quick reference
16 
17**Read this whole section before computing or classifying anything.**
18 
19| Field | Value |
20|---|---|
21| Country | United Kingdom |
22| Primary Legislation | Education (Student Loans) Act 1998; Education (Repayment of Student Loans) Regulations 2009 |
23| Administering Body | Student Loans Company (SLC); collected by HMRC via Self Assessment |
24| Tax Year | 2025-26 |
25| Currency | GBP only |
26| Plan 1 threshold | £26,065 / 9% |
27| Plan 2 threshold | £28,470 / 9% |
28| Plan 4 threshold | £32,745 / 9% |
29| Plan 5 threshold | £25,000 / 9% |
30| Postgraduate Loan threshold | £21,000 / 6% |
31| Payment method | Via Self Assessment (31 Jan / 31 Jul / 31 Jan) |
32| Not tax-deductible | Student loan repayments are NOT business expenses |
33| Contributor | Open Accountants |
34| Validated by | Pending -- requires sign-off by a UK-qualified practitioner |
35| Validation date | Pending |
36 
37**Conservative defaults:**
38 
39| Ambiguity | Default |
40|---|---|
41| Unknown plan type | STOP -- do not guess; direct client to SLC |
42| Unknown total income | Ask -- threshold comparison requires total relevant income |
43| Unknown PAYE deductions | Ask -- PAYE offset affects SA balance |
44| Unknown unearned income | Ask if total unearned > £2,000 (below £2,000 = excluded) |
45| Unknown overseas status | Flag for reviewer -- SLC applies country-specific thresholds |
46 
47---
48 
49## Section 2 -- Required inputs and refusal catalogue
50 
51### Required inputs
52 
53**Minimum viable** -- plan type(s), tax year, and total taxable income (all sources).
54 
55**Recommended** -- P60 or payslips showing PAYE student loan deductions, bank statements showing SA payments, SLC online account balance.
56 
57**Ideal** -- complete SA100 return data, SLC repayment schedule, confirmation of plan type from SLC.
58 
59### Refusal catalogue
60 
61**R-UK-SL-1 -- Plan type unknown.** *Trigger:* client does not know plan type. *Message:* "Do not guess the plan type. Direct the client to check at repaymentplan.studentloanrepayment.co.uk or call SLC directly."
62 
63**R-UK-SL-2 -- Overseas borrower.** *Trigger:* client lives outside the UK for 3+ months. *Message:* "SLC conducts an overseas income assessment with country-specific thresholds. Do not use UK thresholds. Escalate to SLC directly."
64 
65**R-UK-SL-3 -- Loan cancellation or SLC error.** *Trigger:* client disputes loan balance or believes SLC has made an error. *Message:* "Loan balance disputes and administrative errors must be resolved directly with SLC. Out of scope."
66 
67---
68 
69## Section 3 -- Payment pattern library
70 
71This is the deterministic pre-classifier for bank statement transactions related to student loan repayments.
72 
73### 3.1 Student loan repayments via Self Assessment
74 
75| Pattern | Treatment | Notes |
76|---|---|---|
77| HMRC SELF ASSESSMENT | EXCLUDE -- combined SA payment | Student loan repayment is embedded in the SA payment alongside income tax and NIC; cannot isolate from bank statement |
78| HMRC, HM REVENUE & CUSTOMS | EXCLUDE -- SA payment | Same -- student loan component included |
79| SA PAYMENT, SA BALANCING | EXCLUDE -- SA payment | Same |
80 
81### 3.2 Direct SLC payments (voluntary overpayments or overseas)
82 
83| Pattern | Treatment | Notes |
84|---|---|---|
85| SLC, STUDENT LOANS COMPANY | EXCLUDE -- student loan repayment | Direct payment to SLC (voluntary overpayment or overseas repayment) |
86| STUDENT LOAN, STUDENT LOANS | EXCLUDE -- student loan | Generic reference |
87| ERUDIO STUDENT LOANS | EXCLUDE -- legacy loan | Pre-1998 mortgage-style loans (now managed by Erudio) |
88 
89### 3.3 PAYE deductions (visible on payslips, not bank statement)
90 
91| Pattern | Treatment | Notes |
92|---|---|---|
93| SALARY, WAGES (incoming credit) | Not a student loan payment | Student loan deduction already made at source by employer -- net salary shown on bank statement is post-deduction |
94 
95### 3.4 SLC refunds
96 
97| Pattern | Treatment | Notes |
98|---|---|---|
99| SLC REFUND, STUDENT LOANS REFUND | EXCLUDE -- refund of overpayment | SLC refunds overpaid amounts directly |
100 
101---
102 
103## Section 4 -- Worked examples
104 
105Six bank statement classifications for a hypothetical UK self-employed graphic designer with a Plan 2 loan and Postgraduate Loan.
106 
107### Example 1 -- SA balancing payment (includes student loan)
108 
109**Input line:**
110`31.01.2027 ; HMRC SELF ASSESSMENT ; DEBIT ; BALANCING PAYMENT ; -5,800.00 ; GBP`
111 
112**Reasoning:**
113Matches "HMRC SELF ASSESSMENT" (pattern 3.1). This is the 31 January balancing payment. Includes income tax + Class 4 NIC + student loan repayment combined. Cannot isolate student loan component from bank statement. Need SA302 for breakdown.
114 
115**Classification:** EXCLUDE -- combined SA payment. Request SA302 for student loan component.
116 
117### Example 2 -- Voluntary overpayment direct to SLC
118 
119**Input line:**
120`15.05.2026 ; STUDENT LOANS COMPANY ; DEBIT ; VOLUNTARY OVERPAYMENT ; -500.00 ; GBP`
121 
122**Reasoning:**
123Matches "STUDENT LOANS COMPANY" (pattern 3.2). This is a voluntary overpayment made directly to SLC. Not deductible. Not part of SA. Reduce outstanding loan balance.
124 
125**Classification:** EXCLUDE -- voluntary student loan overpayment. Not tax-deductible.
126 
127### Example 3 -- Employment salary (PAYE deduction already made)
128 
129**Input line:**
130`28.02.2026 ; DESIGN AGENCY LTD ; CREDIT ; FEB SALARY ; +2,400.00 ; GBP`
131 
132**Reasoning:**
133Employment income. If the client is on Plan 2, the employer has already deducted student loan repayments from gross salary before paying the net amount. The £2,400 is post-deduction. This is NOT a student loan payment visible on the bank statement.
134 
135**Classification:** NOT a student loan payment. PAYE deduction already made at source.
136 
137### Example 4 -- SLC refund
138 
139**Input line:**
140`20.06.2026 ; SLC REFUND ; CREDIT ; OVERPAYMENT REFUND ; +320.00 ; GBP`
141 
142**Reasoning:**
143Matches "SLC REFUND" (pattern 3.4). Client overpaid and SLC is refunding. Not taxable income. Not a student loan payment.
144 
145**Classification:** EXCLUDE -- refund from SLC. Not taxable.
146 
147### Example 5 -- Payment on account (includes student loan)
148 
149**Input line:**
150`31.07.2026 ; HMRC ; DEBIT ; 2ND PAYMENT ON ACCOUNT ; -2,900.00 ; GBP`
151 
152**Reasoning:**
153Matches "HMRC" (pattern 3.1). Second payment on account. Includes income tax + Class 4 NIC + student loan POA. Cannot split from bank statement.
154 
155**Classification:** EXCLUDE -- SA payment on account. Request SA302 for student loan component.
156 
157### Example 6 -- Erudio legacy loan payment
158 
159**Input line:**
160`01.04.2026 ; ERUDIO STUDENT LOANS ; DEBIT ; MONTHLY REPAYMENT ; -180.00 ; GBP`
161 
162**Reasoning:**
163Matches "ERUDIO STUDENT LOANS" (pattern 3.2). This is a pre-1998 mortgage-style student loan managed by Erudio. Separate from the income-contingent plans. Monthly fixed repayments.
164 
165**Classification:** EXCLUDE -- legacy student loan repayment. Not tax-deductible.
166 
167---
168 
169## Section 5 -- Tier 1 rules
170 
171### Rule 1 -- Single plan formula
172 
173```
174Repayment = (total_relevant_income - threshold) x rate
175```
176 
177If result is negative, repayment = £0.
178 
179### Rule 2 -- What income counts
180 
181| Income Type | Included? |
182|---|---|
183| Self-employment profits (SA103) | Yes |
184| Employment income (SA100) | Yes (but PAYE deductions offset) |
185| Savings income | Yes, if total unearned > £2,000 |
186| Dividend income | Yes, if total unearned > £2,000 |
187| Rental income | Yes, if total unearned > £2,000 |
188| Pension income | Yes |
189| Capital gains | No |
190 
191### Rule 3 -- PAYE offset
192 
193```
194Total repayment due = (total_relevant_income - threshold) x rate
195Less: PAYE deductions already made = Balance due via Self Assessment
196```
197 
198If PAYE exceeds total due, client claims refund from SLC (not HMRC).
199 
200### Rule 4 -- Multiple plans
201 
202Each plan calculated separately with its own threshold. Both apply simultaneously.
203 
204| Combination | Calculation |
205|---|---|
206| Plan 2 + Postgraduate Loan | 9% above £28,470 AND 6% above £21,000 |
207| Plan 1 + Postgraduate Loan | 9% above £26,065 AND 6% above £21,000 |
208| Sequential (Plan 1 then Plan 2) | Plan 1 repaid first, then Plan 2 begins |
209 
210Maximum combined rate: 15% where both thresholds exceeded.
211 
212### Rule 5 -- NOT tax-deductible
213 
214Student loan repayments are NOT business expenses. Cannot be deducted from trading profits.
215 
216### Rule 6 -- Payment schedule (via Self Assessment)
217 
218Same as income tax: 31 Jan (1st POA), 31 Jul (2nd POA), 31 Jan (balancing). POAs = 50% of prior year student loan SA liability.
219 
220### Rule 7 -- Write-off periods
221 
222| Plan | Write-Off |
223|---|---|
224| Plan 1 (pre-Sep 2006) | Age 65 |
225| Plan 1 (post-Sep 2006) | 25 years after first repayment |
226| Plan 2 | 30 years |
227| Plan 4 | 30 years (or age 65 for older borrowers) |
228| Plan 5 | 40 years |
229| Postgraduate Loan | 30 years |
230 
231### Rule 8 -- Plan 5 timing
232 
233Plan 5 repayments cannot begin before April 2026. For 2025-26 SA, no Plan 5 repayment is due.
234 
235### Rule 9 -- Unearned income rule
236 
237Total unearned income (savings + dividends + rent) only counts if it exceeds £2,000/year.
238 
239---
240 
241## Section 6 -- Tier 2 catalogue
242 
243### T2-1 -- Multiple plan interaction
244 
245**Trigger:** Client has more than one plan type simultaneously.
246**Action:** Confirm plan types with SLC before computing. Each plan uses its own threshold.
247 
248### T2-2 -- Overseas earnings
249 
250**Trigger:** Client lives outside UK for 3+ months.
251**Action:** SLC applies country-specific thresholds. Do not use UK thresholds. Escalate.
252 
253### T2-3 -- Approaching write-off date
254 
255**Trigger:** Client is within 2 years of write-off.
256**Action:** Advise against voluntary overpayments. Flag for reviewer to confirm exact write-off date with SLC.
257 
258### T2-4 -- Mid-year overseas move
259 
260**Trigger:** Client was UK-resident part of the year, then moved abroad.
261**Action:** UK SA covers UK-resident period; SLC overseas assessment covers the rest. Flag for reviewer.
262 
263### T2-5 -- Early repayment decision
264 
265**Trigger:** Client asks whether to make voluntary overpayments.
266**Action:** Flag for reviewer. Consider interest rates, write-off proximity, and opportunity cost.
267 
268---
269 
270## Section 7 -- Excel working paper template
271 
272```
273UK STUDENT LOAN REPAYMENT -- WORKING PAPER
274Client: [name]
275Tax Year: [2025-26]
276Prepared: [date]
277 
278INPUT DATA
279 Plan type(s): [Plan 1/2/4/5/PGL]
280 Total relevant income: GBP [____]
281 Employment income: GBP [____]
282 Self-employment profits: GBP [____]
283 Unearned income (if > £2,000): GBP [____]
284 PAYE student loan deductions: GBP [____]
285 
286PLAN [X] CALCULATION
287 Threshold: GBP [____]
288 Income above threshold: GBP [____]
289 Rate: [9% / 6%]
290 Gross repayment: GBP [____]
291 Less PAYE deductions: GBP [____]
292 Net repayment via SA: GBP [____]
293 
294[REPEAT FOR ADDITIONAL PLANS]
295 
296TOTAL STUDENT LOAN VIA SA: GBP [____]
297 
298PAYMENT SCHEDULE
299 1st POA (31 Jan): GBP [____]
300 2nd POA (31 Jul): GBP [____]
301 Balancing (31 Jan): GBP [____]
302 
303REVIEWER FLAGS
304 [List any Tier 2 flags]
305```
306 
307---
308 
309## Section 8 -- Bank statement reading guide
310 
311### How student loan payments appear on UK bank statements
312 
313**Via Self Assessment (most common for self-employed):**
314- Combined with income tax and NIC in a single HMRC debit
315- Cannot identify student loan component from bank statement alone
316- Need SA302 tax calculation for breakdown
317- Timing: 31 Jan and 31 Jul
318 
319**Direct to SLC (voluntary overpayments):**
320- Description: "STUDENT LOANS COMPANY", "SLC"
321- Any timing (client-initiated)
322- Clearly identifiable as student loan specific
323 
324**PAYE deductions (employed clients with additional self-employment):**
325- Not visible on bank statement -- deducted from gross salary before net payment
326- Visible on payslips and P60 only
327 
328**Key identification tips:**
3291. For self-employed, student loan is almost always embedded in SA payments
3302. The SA302 is the only reliable source for the student loan component
3313. Direct SLC payments are voluntary overpayments
3324. SLC refunds appear as credits from SLC
333 
334---
335 
336## Section 9 -- Onboarding fallback
337 
338If the client provides only a bank statement:
339 
3401. **Identify HMRC SA payments** -- these contain the student loan component (if any)
3412. **Look for direct SLC payments** -- these are voluntary overpayments
3423. **Flag:** "Student loan repayments for self-employed are collected through Self Assessment and combined with income tax and NIC in a single HMRC payment. The bank statement cannot isolate the student loan component. Please provide the SA302 tax calculation and confirm the plan type with SLC."
343 
344---
345 
346## Section 10 -- Reference material
347 
348### Thresholds and rates (2025-26)
349 
350| Plan | Annual Threshold | Rate |
351|---|---|---|
352| Plan 1 | £26,065 | 9% |
353| Plan 2 | £28,470 | 9% |
354| Plan 4 | £32,745 | 9% |
355| Plan 5 | £25,000 | 9% |
356| Postgraduate Loan | £21,000 | 6% |
357 
358### Test suite
359 
360**Test 1:** Plan 2, self-employed, income £35,000. -> (£35,000 - £28,470) x 9% = £587.70.
361 
362**Test 2:** Plan 1, self-employed, income £60,000. -> (£60,000 - £26,065) x 9% = £3,054.15.
363 
364**Test 3:** Plan 4, self-employed, income £40,000. -> (£40,000 - £32,745) x 9% = £652.95.
365 
366**Test 4:** Plan 5, income £30,000. -> (£30,000 - £25,000) x 9% = £450.00 (but Plan 5 collections may not start until April 2026).
367 
368**Test 5:** PGL only, income £28,000. -> (£28,000 - £21,000) x 6% = £420.00.
369 
370**Test 6:** Plan 2 + PGL, income £45,000. -> Plan 2 = £1,487.70, PGL = £1,440.00. Total = £2,927.70.
371 
372**Test 7:** Plan 2, income £25,000. -> Below threshold. Repayment = £0.
373 
374**Test 8:** Plan 1, employed £28,000 (PAYE deductions made) + self-employed £12,000. Total £40,000. -> Total = £1,254.15. Less PAYE £174.15. Balance via SA = £1,080.00.
375 
376### Prohibitions
377 
378- NEVER guess the client's plan type
379- NEVER include capital gains in the repayment income calculation
380- NEVER treat student loan repayments as tax-deductible
381- NEVER apply UK thresholds to overseas borrowers
382- NEVER advise voluntary overpayments without checking write-off proximity
383- NEVER combine plan thresholds -- each plan has its own separate calculation
384- NEVER assume PAYE deductions have been made -- verify with payslips or P60
385- NEVER present figures without noting that SLC manages the loan balance and interest
386- NEVER compute Plan 5 repayments for tax years before 2026-27 without confirming start date
387- NEVER include unearned income if total unearned is £2,000 or less
388 
389---
390 
391## Disclaimer
392 
393This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, EA, tax attorney, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon.
394 
395The most up-to-date, verified version of this skill is maintained at [openaccountants.com](https://openaccountants.com). Log in to access the latest version, request a professional review from a licensed accountant, and track updates as tax law changes.
396 

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About

Use this skill whenever asked about UK Student Loan repayment for self-employed individuals. Trigger on phrases like "student loan repayment", "Plan 1", "Plan 2", "Plan 4", "Plan 5", "postgraduate loan", "student loan self-employed", "student loan Self Assessment", "SLC repayment", "student loan deduction", or any question about student loan obligations for a self-employed client. Also trigger when classifying bank statement transactions showing SLC repayments via SA, PAYE student loan deductions, or direct SLC payments. This skill covers Plan 1-5 and Postgraduate Loan thresholds, self-employed SA calculation, multiple plan interaction, bank statement classification patterns, overseas earnings, write-off periods, and edge cases. ALWAYS read this skill before touching any UK student loan repayment work.

GBty-2025

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