Why a Bonus or a Buy-to-Let Can Add 9% to Your Tax Bill in 2026/27

Most borrowers meet their student loan through payroll and never think about it again. The deduction appears on a payslip, the balance shrinks, and the whole arrangement feels automatic. Self Assessment breaks that illusion. Once you file a return, HMRC recalculates your student loan position on a much broader definition of income — and the resulting figure can be substantially larger than the amount you would have paid through PAYE on the same money.

The charge is calculated on total income, not just salary

When HMRC processes a Self Assessment return, the student loan repayment is worked out as a percentage of your income above the relevant threshold. The important detail is what counts as income in that calculation. It is not limited to earnings from employment. It includes trading profits, rental income, savings interest and dividends — broadly, the income that is liable to income tax on the return.

Payroll, by contrast, only ever sees your salary. A landlord with a Plan 2 loan who earns £34,000 from an employer and £8,000 of rental profit will have PAYE deductions based on the salary alone, while the return will sweep the rental profit into the repayment calculation. At 9%, that £8,000 adds £720 to the January bill. Nothing has gone wrong; the system is simply doing what it always does, and the borrower was never shown the full picture.

The same logic applies to a one-off bonus. A large payment in a single month can push a pay period well above the monthly threshold, producing a visibly painful deduction, and the annual reconciliation in Self Assessment then corrects the total up or down. The shock is rarely the rate. It is the realisation that income you mentally filed under "property" or "investments" has been quietly treated as loan-repayable.

Which plan applies, and at what rate

There is no single student loan rate. The percentage depends on the plan attached to your record:

• Plan 1 — typically for borrowers who started undergraduate study before September 2012 in England, Wales or Northern Ireland, and for many Northern Ireland borrowers.
• Plan 2 — for English and Welsh undergraduates who began in or after September 2012.
• Plan 4 — for Scottish borrowers.
• Plan 5 — for English undergraduates starting from August 2023 onwards.
• Postgraduate loan — a separate 6% charge on master's and doctoral loans.

The main undergraduate plans carry a 9% rate on income above the threshold. Postgraduate loans are charged at 6% above their own, lower threshold. Borrowers holding both a postgraduate loan and an undergraduate loan can face a combined marginal rate of 15% on income above both thresholds — which is worth knowing before accepting a promotion that looks, on paper, more generous than it will feel in the bank.

Thresholds are uprated each April, and the Plan 5 and postgraduate thresholds are set on a different, longer-term basis. Because the published figures change annually, always confirm the 2026/27 thresholds on GOV.UK or in your Student Loans Company account before you rely on an estimate. The mechanism is stable; the numbers are not.

Checking that HMRC has the right plan

An incorrect plan is one of the most common sources of overpayment, and it is usually nobody's fault. Borrowers who moved between nations, returned to study, or took a postgraduate course after an undergraduate degree frequently have the wrong marker on their record.

Two checks are worth making before you file. First, open your Student Loans Company online account and confirm the plan and outstanding balance shown there. Second, check the student loan plan field on your payslip, which payroll providers usually display alongside the deduction. If the plan on your return differs from the one on your SLC record, correct the return rather than the SLC record — the return should reflect the plan you are actually on.

If you have been repaying on the wrong plan, the difference is recoverable. Contact the Student Loans Company with evidence of your course start date; where the plan was too expensive, refunds are issued. Where it was too cheap, expect a bill.

Where double repayment creeps in

Repaying twice is more common than borrowers expect, and it rarely announces itself. The typical patterns are:

1. Payroll continued after the balance cleared. Employers stop deductions only when the SLC issues a stop notice, which takes time to travel. If your final payslips show deductions after your balance reached zero, you are owed money.
2. Two employments, both deducting. Two part-time jobs each applying the threshold separately in-year can over-deduct, though the annual Self Assessment calculation usually corrects this.
3. A wrong plan combined with Self Assessment. You pay on Plan 2 through payroll, file a return, and a Plan 1 position is applied — or the reverse — producing a mismatch that only surfaces when the figures are compared.
4. A return filed with the wrong box ticked. Answering "no" to the student loan question removes the charge from the calculation but does not remove the debt. HMRC will normally catch it later, and the correction arrives with interest and possibly a penalty.

If you have overpaid, the route depends on the cause. Refunds arising from a wrong plan or deductions taken after the balance cleared are handled by the Student Loans Company. Errors on the return itself are corrected by amending it — generally within twelve months of the filing deadline, so for a 2026/27 return that means by 31 January 2028.

Practical steps before you file

Gather your P60 and any P45s for the year, and note the student loan deductions already taken so you can see what the return is adding. Where you have self-employment or property income, remember that legitimate expenses reduce profit and therefore reduce the repayment — a genuine saving, not merely a deferral.

Be aware, though, that not every relief helps. Trading expenses and salary sacrifice arrangements lower the income on which the repayment is based. Reliefs given as a tax reducer, such as Gift Aid donations and personal pension contributions made from your own account, generally do not reduce the student loan figure, however much they reduce the income tax.

Finally, look at your SA302 once the return is processed. The student loan repayment appears there as a distinct line, separate from income tax and Class 4 National Insurance, so you can see precisely how much of the January 2027 bill belongs to the loan. Borrowers who are close to clearing their balance should contact the Student Loans Company before the filing deadline; continuing to repay through a return after the debt is settled is the most avoidable overpayment of all.