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Income tax, National Insurance and net pay for any UK salary, 2026-27.
Postgraduate Loan borrowers repay 6% of their earnings above a threshold of £21,000 a year for the 2026-27 tax year, collected by their employer through payroll [1][2]. Postgraduate borrowing in England rose 8.7% to £0.8 billion in the 2025-26 financial year, the second consecutive annual increase [3].
The Postgraduate Loan, often shortened to PGL, is the loan that funds master's and doctoral study for students from England and Wales [4]. It behaves differently from the undergraduate plans in three ways that matter to payroll: it has its own lower threshold, its own rate, and it runs at the same time as any undergraduate plan rather than replacing it.
This guide sets out who repays a PGL, the 2026-27 period thresholds, how the deduction is calculated alongside a plan deduction, the PGL1 and PGL2 notices that control it, and the reporting that follows. It finishes with worked figures from a payroll engine and the errors that most often affect employees with postgraduate debt.
Key takeaways
- The Postgraduate Loan threshold is £21,000 a year for 2026-27, or £1,750 a month and £403.84 a week in payroll.
- The deduction is 6% of earnings above the period threshold, rounded down to the nearest whole pound.
- A PGL deduction runs alongside a Plan 1, 2, 4 or 5 deduction; the two are calculated separately and both appear on the payslip.
- Only borrowers funded in England or Wales are on the Postgraduate Loan plan. Scottish postgraduate loans sit on Plan 4 and Northern Irish ones on Plan 1.
- Employers start PGL deductions on a starter checklist answer or a PGL1 notice and stop only on a PGL2 notice.
- There is no default for an unknown PGL: the Plan 5 fallback covers undergraduate loans only.
Who repays a Postgraduate Loan
The Postgraduate Loan plan exists for one group of borrowers: master's and doctoral students funded by Student Finance England or Student Finance Wales [4]. The funding body, not the university, decides which plan applies.
Master's and doctoral borrowers from England and Wales
Gov.uk confirms that a borrower funded by Student Finance England is on the Postgraduate Loan plan for a postgraduate master's or doctoral course, and that Welsh borrowers on such courses since 1 September 2012 are on the same plan [4]. Student Finance Wales runs its own postgraduate application process, but the repayment rules are shared [5].
The amounts borrowed have grown each year. A Master's Loan can reach £13,206 for a course starting on or after 1 August 2026, and a Doctoral Loan can reach £31,122 [6][7]. Neither amount depends on household income, which is part of the reason postgraduate debt now appears on payrolls across every sector [6].
Scottish and Northern Irish postgraduates are not on PGL
Scottish students who borrowed from the Student Awards Agency Scotland repay on Plan 4, whether their course was undergraduate or postgraduate [4]. Northern Irish borrowers repay on Plan 1 for both types of course [8].
The practical effect is that an employee who mentions a master's loan may not have a Postgraduate Loan in payroll terms at all. The starter checklist and the HMRC notice settle the question, not the type of course [2][9].
Why statistics call it Plan 3
Payroll systems have no Plan 3, yet the Student Loans Company's statistics describe postgraduate loans as "Repayment Plan 3" [3]. In HMRC's payroll specification the same loan is simply the postgraduate loan, with its own threshold and rate codes [10].
The naming gap causes real confusion when an employee forwards a statement mentioning Plan 3. Payroll should record it as a Postgraduate Loan, never as an undergraduate plan type [2][11].
The PGL threshold and rate for 2026-27
A repayment threshold is the level of earnings below which no deduction is due. Payroll applies a period threshold, derived from the annual figure, to the pay in each individual period [10].
Period thresholds
HMRC's specification divides the annual threshold by 52 for weekly pay and by 12 for monthly pay, rounding down to the penny [10]. The employer guidance quotes £21,000 annually, £1,750 a month or £403.84 a week [2].
| Pay frequency | Postgraduate Loan threshold 2026-27 |
|---|---|
| Annual | £21,000 |
| Monthly | £1,750 |
| Four-weekly | £1,615.38 |
| Fortnightly | £807.69 |
| Weekly | £403.84 |
Borrower-facing pages round the weekly figure to £403 [12]. Payroll should use £403.84 from the specification, since the rounded figure would deduct slightly more in some weeks [10].
The PGL alongside the undergraduate plans
The table compares the Postgraduate Loan with the four undergraduate plans for 2026-27, using the figures applied in payroll [2][1].
| Loan | Annual threshold | Monthly threshold | Rate |
|---|---|---|---|
| Postgraduate Loan | £21,000 | £1,750 | 6% |
| Plan 5 | £25,000 | £2,083.33 | 9% |
| Plan 1 | £26,900 | £2,241.66 | 9% |
| Plan 2 | £29,385 | £2,448.75 | 9% |
| Plan 4 | £33,795 | £2,816.25 | 9% |
The PGL has the lowest threshold of any loan, so it is often the first deduction to appear on a payslip as pay rises. Its lower rate softens the effect, but the earlier start means many employees repay a PGL long before an undergraduate plan begins to bite [10].
How the deduction is calculated
The formula mirrors the undergraduate plans: earnings in the period minus the period threshold, multiplied by the rate, rounded down to the pound [10].
Earnings and rounding
The earnings used are the gross pay figure for Class 1 secondary National Insurance, so the deduction tracks NI-able pay rather than taxable pay [2][13]. The specification requires the periodic threshold to be rounded down to the penny and the deduction rounded down to the pound [10].
Each pay period is assessed on its own. Gov.uk's terms guidance explains that repayments are worked out on individual pay periods, not on income for the whole year [14]. A borrower whose annual income ends below £21,000 after a single high month can reclaim the excess from the Student Loans Company [15].
Running a PGL with another plan
A Postgraduate Loan can be used on its own or at the same time as one of the undergraduate plan types [10]. Gov.uk describes the borrower's position as paying 9% over the lowest threshold of the undergraduate plans held, plus a separate 6% charge on income above £21,000 for the postgraduate debt [1].
The two deductions are calculated independently. The specification adds one ordering rule: where both are in use, loan deductions must be allocated first to the postgraduate loan, because it carries a higher interest charge [10]. That allocation matters when there is not enough pay to cover every deduction, for example when other statutory deductions take priority [16].
Worked examples
The figures below come from the Moonworkers payroll engine applying the 2026-27 rules. Each assumes tax code 1257L, NI category A and an employee taxed under rest-of-UK income tax rates [17].
A PGL on its own
An employee paid £2,500 a month with only a Postgraduate Loan has a PGL deduction of £45, alongside £290.20 of income tax and £116.16 of employee National Insurance, for take-home pay of £2,048.64 [2][10]. Over twelve identical months that PGL deduction comes to £540.
At £4,000 a month the PGL deduction rises to £135, leaving take-home pay of £3,038.64. A weekly-paid employee on £500 has a PGL deduction of £5, with £51.60 of income tax and £20.64 of employee NI [2][13].
A PGL with Plan 2 or Plan 5
Gov.uk's own example for a borrower with a Postgraduate Loan and Plan 2 on £2,500 a month lands on a combined £49 [1]. The engine returns the same split: a Plan 2 deduction of £4 and a PGL deduction of £45, leaving take-home pay of £2,044.64 [10].
The table shows how the second loan changes the picture at higher pay. Each row is a monthly deduction returned by the engine [2][1].
| Monthly pay and loans | Plan deduction | PGL deduction | Take-home pay |
|---|---|---|---|
| £2,500, PGL only | £0 | £45 | £2,048.64 |
| £2,500, PGL and Plan 2 | £4 | £45 | £2,044.64 |
| £3,000, PGL and Plan 5 | £82 | £75 | £2,296.64 |
| £4,000, PGL only | £0 | £135 | £3,038.64 |
| £4,000, PGL and Plan 2 | £139 | £135 | £2,899.64 |
An employee on £3,000 a month with a Plan 5 loan and a PGL repays £82 on Plan 5 and £75 on the PGL, which together exceed the £156.16 of employee NI on the same pay. For recent graduates with both loans, student debt can therefore cost more each month than National Insurance [13][1].
Below the threshold and in a bonus month
An employee paid £1,700 a month sits below the £1,750 monthly threshold and has a PGL deduction of £0 [2]. If the same employee receives a bonus that lifts pay to £6,000 in one month, the PGL deduction for that month is £255 [14].
Because each period stands alone, the employer deducts that £255 even if the employee's annual income will finish below £21,000. Any refund is handled by the Student Loans Company after the tax year, not by adjusting later payslips [15][18].
Starting and stopping PGL deductions
As with every student loan, the employer acts on information from the employee at the start and on HMRC notices afterwards. There is no discretion to skip or pause a deduction [2][19].
The starter checklist
A new employee without a P45 completes the starter checklist, which asks separately about undergraduate loans and Postgraduate Loans [9]. Gov.uk tells employers that the checklist should identify the plan or loan type, or both, and that deductions start from the next available payday [2].
There is no fallback for an unknown PGL. Gov.uk allows employers to run Plan 5 temporarily when an employee cannot name an undergraduate plan, but that fallback is limited to the undergraduate plan types [2]. An employee who is unsure about postgraduate debt should check with the Student Loans Company, and the employer waits for a PGL1 if nothing is confirmed [20].
PGL1 and PGL2 notices
HMRC sends a PGL1 start notice to tell an employer that an employee has a Postgraduate Loan. The employer checks the details and updates payroll from the next available payday [2]. The notices run independently of the SL1 and SL2 notices that control undergraduate plans [19].
A PGL2 stop notice ends the deduction. The employer stops from the first available payday after the stop date on the notice, and does not stop on the employee's word alone [2][10]. An SL2 for an undergraduate plan never stops a PGL, and a PGL2 never stops a plan deduction.
Reporting on the FPS and P60
The PGL deduction is entered in whole pounds in its own box on the Full Payment Submission and on the P60, separate from the undergraduate plan deduction [2][21]. The FPS is due on or before each payday [22].
The P60 must reach every employee on the payroll at 5 April by 31 May, and it shows the year's PGL total [21]. Borrowers use that figure to check their balance, so a mismatch between the P60 and the payslips generates queries quickly [15].
Repayment rules outside the payslip
Some PGL rules sit with the borrower rather than the employer, but they explain why deductions appear when they do.
When repayment starts
The earliest a Master's Loan borrower starts repaying is the April after leaving the course [12]. For a Doctoral Loan, repayment starts the April after the course ends or the April four years after the course started, whichever comes first, even if the borrower is still studying [14].
That second rule puts PGL deductions on the payslips of doctoral researchers in part-time or teaching roles. An employer that sees a PGL1 for a current PhD student should apply it as normal [2][23].
Interest, write-off and Self Assessment
Interest on a Postgraduate Loan is normally RPI plus 3%, and gov.uk applies a 6% cap between 1 September 2026 and 31 August 2027 [14][1]. A PGL for a student from England or Wales is written off 30 years after the April the borrower was first due to repay [8].
Self-employed borrowers repay through Self Assessment, with HMRC working out the amount from the tax return [15][24]. Where an employee also files a return, the payroll deductions shown on the P60 count towards the annual liability [21].
Common PGL payroll errors
Most PGL mistakes come from treating it as another plan type rather than a separate loan.
Replacing a plan with the PGL
The most damaging error is switching an employee from an undergraduate plan to the PGL when a PGL1 arrives. The PGL is added alongside the plan, not substituted for it [10][2]. Payroll software that holds only one loan field per employee cannot run both, and HMRC's specification for developers expects both to be supported [25].
Using the wrong rate or threshold
Applying the undergraduate 9% rate to a Postgraduate Loan over-deducts by half [10]. HMRC's deduction tables state the 6% rate and the £21,000 threshold for 2026-27 [26].
The legal basis for collection sits in the Education (Student Loans) (Repayment) Regulations, which HMRC's specification translates into payroll logic [27][10]. Payroll that loads the specification's figures each April avoids both errors.
How payroll software should handle the PGL
The Postgraduate Loan is the clearest test of whether payroll software models student debt properly. It needs a second loan field, its own threshold set for every pay frequency, its own rate, and notices that change it without touching the undergraduate plan.
An HMRC-recognised payroll product does this by default. Moonworkers' UK payroll software for SMEs calculates the PGL and the plan deduction side by side and reports both on the FPS. Accountants handling many schemes apply the same logic across clients through the payroll bureau software, with each PGL1 and PGL2 logged against the right employee.
Platforms that need the calculation inside their own product can call the UK payroll engine, which returns the plan and PGL deductions separately in one response, as set out in the API documentation. The companion guides on student loan deductions through payroll and the Plan 4 student loan cover the undergraduate plans in the same depth.
Check a postgraduate loan deduction
The Moonworkers UK salary calculator applies the 2026-27 PAYE, National Insurance, student loan and Postgraduate Loan rules to any gross salary.
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About this calculator
This calculator gives you a close estimate of your UK payroll deductions for 2026-27, using HMRC's exact percentage method with periodised thresholds. It handles the three tax territories, K codes with the 50% regulatory limit and its carry-forward, weeks 53, 54 and 56, the cumulative and W1/M1/X bases, student and postgraduate loans, and pension contributions on qualifying earnings. It still won't match your payslip to the penny in every case: it does not cover in-year tax code changes, payrolled benefits in kind, NI deferral across more than one employment, directors on the annual earnings period, or employer-level annual adjustments such as the Employment Allowance and the apprenticeship levy. Powered by the same engine as the Moonworkers Payroll API.
Frequently asked questions
Why might the result differ from my payslip?
This calculator uses your current gross pay and tax code to produce an estimate. K-code carry-forwards and weeks 53, 54 and 56 are handled, and the Year-to-date section reproduces a specific period exactly. What your employer may apply that this does not: a mid-year tax code change, benefits in kind processed through payroll, or NI deferral across more than one employment. For most employees on a standard tax code the difference is negligible.
What tax code should I enter?
Use the tax code shown on your most recent payslip or the PAYE Coding Notice (P2) from HMRC. If you're not sure, 1257L is the standard code for most employees resident in England, Wales, or Northern Ireland. Use S1257L for Scotland or C1257L for Wales if you pay Scottish or Welsh income tax.
Which NI category applies to me?
Most employees use Category A. Use M if you are under 21, H if you are an apprentice under 25, or C if you are over State Pension age. Your employer is responsible for assigning the correct category — if in doubt, check your payslip.
Which student loan plan am I on?
Your plan depends on when and where you studied. Plan 1 covers students who started before September 2012. Plan 2 is for English and Welsh students who started from September 2012 to July 2023. Plan 5 applies to English students who started from August 2023. Plan 4 covers Scottish students. You can check your plan at gov.uk or on your payslip.
What is the YTD cumulative PAYE mode?
HMRC's standard method calculates income tax on your total earnings to date each period, then subtracts tax already paid. If you're mid-year and want to see exactly what tax should be deducted in a specific period, expand the Year-to-date section and enter your running totals from previous periods only.
Conclusion
The Postgraduate Loan sits apart from every other student loan in payroll. It starts at the lowest threshold, charges a lower rate and runs in parallel with the undergraduate plans, under its own notices and its own box on the FPS. Employers who treat it as an additional deduction rather than a replacement, and who act only on PGL1 and PGL2 notices, will collect it correctly.
Postgraduate borrowing keeps rising, and the amounts available for courses starting from 1 August 2026 are the highest yet. More employees will carry two loans at once, and payroll that models each loan as its own rule set, rather than one field with a plan letter, will matter more with every intake.
Frequently asked questions
Can an employee repay a Postgraduate Loan and Plan 2 at the same time?
Yes. A Postgraduate Loan runs alongside any one undergraduate plan, and the employer calculates the two deductions separately [10]. On £2,500 a month the borrower repays £4 on Plan 2 and £45 on the PGL, the same combined £49 shown in gov.uk's example [1].
What is the postgraduate loan repayment threshold per month?
The monthly threshold for 2026-27 is £1,750, and the weekly threshold used in payroll is £403.84 [2]. Both derive from the annual threshold of £21,000 [10]. The deduction is 6% of pay above the period threshold.
Is a Scottish master's loan a Postgraduate Loan for payroll?
No. A postgraduate loan from the Student Awards Agency Scotland is repaid on Plan 4, and a Northern Irish postgraduate loan on Plan 1 [4]. Only borrowers funded in England or Wales are on the Postgraduate Loan plan [8].
Does a PhD student still studying repay a Doctoral Loan through payroll?
It can happen. A Doctoral Loan becomes repayable the April four years after the course started if that comes before the end of the course, even while the borrower is still studying [14]. If the researcher earns above the threshold in a paid role, the employer applies the PGL1 as for any other employee [2].
