Student and postgraduate loans

Information on student and postgraduate loans in Sage 50 Payroll.

Deductions rates and thresholds

There are five types of loans:

• Plan Type 1
• Plan Type 2
• Plan Type 4 – Scottish Student Loans (SSL)
• Postgraduate loan (PGL)
• Plan Type 5

Plan type 5

This new plan type is effective from 6 April 2026, in the 2026/2027 tax year. We've included this in the Sage 50 Payroll year end update.

Check legislation

You can check the thresholds from which deductions apply and the rate of deductions in your software:

1. Click Company, then Legislation.
2. Click the Student/Postgraduate tab.

To find out more, go to Gov.UK.

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Start notice (SL1/PGL1)

It’s important that you:

• Check your HMRC online account for either student loan or Postgraduate loan, or both, start and stop notices
• Take the correct action to start student and or postgraduate loan deductions as soon as possible
• Record the deductions correctly on your Full Payment Submission (FPS)

This ensures that any employees who have these loans don't pay more or less than necessary.

You can set up the IR Secure Mailbox in Sage 50 Payroll to receive notifications and messages from HMRC.

Apply the notice

If you receive an SL1 and or PGL1 from HMRC, it’s important that you:

• Use the correct loan or plan type
• Check the start date shown on the notice and take deductions from the next available pay day

You can set up and process student and postgraduate loans in Sage 50 Payroll.

If an employee's loan type changes, follow the Change a student loan plan type mid-year article.

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Off-payroll working rules

Sometimes workers operate through their own companies. In this case, employers aren’t responsible for deducting student or postgraduate loans.

The worker accounts for their loans as applicable in their own tax return. To find out more, visit the off-payroll working rules (IR35) article.

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Student loans in Scotland

Plan type 4 applies to student loans in Scotland. This impacts employers across the UK, not only those located in Scotland.

It applies to employers who have employees paying back their loan from the Student Award Agency for Scotland (SAAS).

HMRC notifies employers by a student loan start notice, SL1 for all affected employees.

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Calculations

To see examples of the calculation, visit our student loan - example calculations article.

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