Plan 2 loans: What are employed ‘earnings’ for student loan repayments?

⚠️ Please note that sometimes links from this website will go directly to our main Low Incomes Tax Reform Group’s (LITRG) website.

Your earnings for student loan purposes are calculated in the same way as they are for National Insurance contributions (NIC). This is not always the same figure as the earnings on which you pay tax. For example, NIC is not due on loans your employer makes to you (links to our main LITRG website) and the GOV.UK website gives some guidance on tax and NIC differences where you receive tips or other company benefits.

Pensions that you receive are not counted as earned income but as unearned income so may affect the amount you are required to pay back on your student loan if you complete a tax return. Normally pension contributions that you make through your payroll will be deducted from your pay for income tax purposes, but they will not reduce your pay for National Insurance purposes and hence will be included when calculating student loan repayments.

Any income from employment which you earn before the date you are due to start making repayments should not be taken into account in calculating the amount you have to pay.