Student Loan Plan Type 5 from April 6, 2026

The updates to student loans are summarized below:

  • The New Starter Declaration is updated to include Plan 5 and the revised text.
  • You can select Plan Type 5 in the student loans calculation card and the fast formula is updated to include this. The additional value definitions for Plan Type 5 include Annual Threshold 25,000 and percentage of 9% for student loans and 6% for postgraduate loans.
  • The annual thresholds used to calculate Student Loan deductions are increasing from April 6, 2026.
  • The annual threshold for Postgraduate Loan deductions will remain frozen.
  • The actual calculation method remains unchanged. These apply to existing and new student loans.
  • The deduction rates calculated on earnings above the thresholds are unchanged.

Stay compliant with legislative changes to Student Loans for Plan Type 5 from April 6, 2026.

Steps to enable and configure

You need to run the feature upgrade process for the student loan elements to include these changes. To do this:

  1. Go to  My Client Groups -> Payroll -> Submit a Flow.
  2. Select the appropriate LDG.  
  3. Search for the Run Feature Upgrade flow.
  4. Enter a name for the payroll flow.
  5. Select the Upgrade Student Loan elements flow parameter.
  6. Submit the flow.

After you finish running the feature upgrade process, you also need to recompile the fast formulas. Here's how you can do this:

  1. Go to My Client Groups -> Show More -> Fast Formulas.
  2. Select the appropriate LDG for the UK. 
  3. Search for the <Student Loan Element Name>] INVDED formula. For example, this would be Student Loan INVDED formula, if the name of the defined element in the environment is Student Loan.
  4. Set the Effective-As-of-Date to 06-Apr-2026.
  5. Compile the formula. 

Key resources

For more information on all the legislative updates, see Payroll Legislative Updates For Tax Year 2026-27.