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September 2023

Student Loan and Self Employment

If you are a self-employed person who has taken out a student loan for an undergraduate, postgraduate or Initial Teacher Training course, you may be wondering how to repay your loan and what are your obligations. In this blog post, we will explain the main features and benefits of the student loan repayment system for self-employed people, and help you understand your rights and responsibilities.

What is a student loan?

A student loan is a type of financial support that you can get from the government to help you pay for your tuition fees and living costs while studying. There are different types of student loans depending on when and where you started your course, such as:

You can find out more about the different types of student loans and how they work on the GOV.UK website.

How do I repay my student loan if I am self-employed?

If you are self-employed, you will repay your student loan through the self assessment tax system. This means that you will need to:

How much do I need to repay?

The amount you need to repay depends on your income and the repayment threshold for your loan plan. The repayment threshold is the amount of income you can earn before you start repaying your loan. It is different for each plan and it changes every year. For example, in the tax year 2021/22, the repayment thresholds are:

You will repay 9% of your income above the threshold for Plan 1, Plan 2 and Plan 4 loans, and 6% of your income above the threshold for postgraduate loans. For example, if you have a Plan 2 loan and your income in the tax year 2021/22 is £30,000, you will repay:

You can use the online calculator on the GOV.UK website to estimate how much you need to repay based on your income and loan plan.

What are the benefits of repaying my student loan through self assessment?

Repaying your student loan through self assessment has some advantages, such as:

What are my responsibilities as a self-employed person with a student loan?

As a self-employed person with a student loan, you have some responsibilities that you need to fulfil, such as:

Where can I get more information and advice?

If you need more information and advice on student loans and self-employment, you can visit the following websites:

You can also contact us here at Add Liv Ltd if you need help with your tax return or student loan repayments.