Student loans - example calculations

Solution Properties

Solution ID:

200427112428741

Last Modified Date:

Wed Apr 02 12:12:10 UTC 2025

Taxonomy Path:

Case category//How do I...//processing

Author:

[email protected]

Student loans - example calculations

Description

Legislation

You can find Student loan thresholds and rates in your software:

Set the process date into the tax year you'd like to check the legislation.
Click Company, then Legislation.
Click the Student/Postgraduate tab.

NOTE: The student loan calculation requires that the result rounds down to the nearest pound.

Calculation examples

The examples below use the thresholds and rates for the 2025/2026 tax year.

Click the option for the pay frequency you'd like to check.

▼ Monthly paid employee

Plan type 1

In this example, the employee earns £2500.

This calculation is: (Employee pay - monthly threshold) x 9%

= (£2,500 - £2,172.08) = £327.92

= £327.92 @ 9% = £29.5128

= £29.00 (Rounded down to whole pounds)

Plan type 2

In this example, the employee earns £2500.

This calculation is: (Employee pay - monthly threshold) x 9%

= (£2,500 - £2,372.50) = £127.50

= £127.50 @ 9% = £11.475

= £11.00 rounded down to whole pounds

▼ Fortnightly paid employee

The calculation for student loans uses weekly or monthly thresholds. To calculate a student loan for an employee paid fortnightly, divide the employee's earnings into equal weekly amounts first. Use this weekly amount to calculate the weekly student loan deduction due, then multiply this by the number of weeks in the pay period.

Plan type 1

In this example, the employee earns £1,200.

The calculation is: (((employee pay/2) - weekly threshold) x 9%) x 2

= £1,200/2 = £600

= £600 - £501.25 = £98.75

= £98.75 @ 9% = £8.8875

= £8.8875 x 2 = £17.775

= £17.00 rounded down to whole pounds

Plan type 2

In this example, the employee earns £2000.

This calculation is: (((employee pay/2) - weekly threshold) x 9%) x 2

= £2000/2 = £1000

= £1000 - £547.50 = £452.50

= £475.1 @ 9% = £40.725

= £40.725 x 2 = £81.45

= £81.00 rounded down to whole pounds

▼ Weekly paid employee

Plan type 1

In this example, the employee earns £600.

This calculation is: (Employee pay - weekly threshold) x 9%

= £600 - £501.25 = £98.75

= £98.75 @ 9% = £8.8875

= £8.00 rounded down to whole pounds

Plan type 2

In this example, the employee earns £600.

This calculation is: (Employee pay - weekly threshold) x 9%

= £600 - £547.50 = £52.50

= £52.50 @ 9% = £4.725

= £4.00 rounded down to whole pounds

▼ Four weekly paid employee

The calculation for student loans uses weekly or monthly thresholds. To calculate student loan deductions for an employee paid four weekly, you must divide the employee's earnings into equal weekly amounts first. Use the weekly amount to calculate the weekly student loan deduction, then multiply this by the number of weeks in the pay period.

Plan type 1

In this example, the employee earns £2400.

The calculation is: (((employee pay/4) - weekly threshold) x 9%) x 4

= £2400 / 4 = £600

= £600 - £501.25 = £98.75

= £98.75 @ 9% = £8.8875

= £8.8875 x 4 = £35.55

= £35.00 Rounded down to whole pounds

Plan type 2

In this example, the employee earns £2500.

The calculation is: (((employee pay/4) - weekly threshold) x 9%) x 4

= £2500 / 4 = £625

= £625 - £547.50 = £77.50

= £77.50 @ 9% = £6.975

= £6.975 x 4 = £27.90

= £27.00 rounded down to whole pounds