Background 

Since April 2021 there have been three undergraduate loan plans to handle through the payroll, plus postgraduate loans. Plan 4 loans came about because the Scottish government decided to increase the threshold for repayers who had received a loan from Student Awards Agency Scotland. This necessitated breaking Scottish repayers out of the Plan 1 cohort and introducing a separate loan plan. The Plan 4 threshold was confirmed in November 2021 and was uprated to £25,375 with deductions over the threshold remaining at 9%. Plan 1 repayers are English, Welsh, and Northern Irish students who took out a loan pre-September 2012. They have seen their threshold uprated to £20,195, again with a 9% deduction rate.

Plan 2 and postgrads

No announcements were made on Plan 2 and postgraduate loan thresholds because these were subject to proposals from the review of higher education funding in England that Philip Augar undertook for the government in 2019. There was mounting concern from payroll software developers that this information would not be made public in time for inclusion in software for April 2022 as this is released to clients at the end of January each year. After much lobbying an announcement was made on 28 January 2022 that the thresholds for Plan 2 and postgraduate loans would not be uprated. This means they will remain at £27,295 for Plan 2 and £21,000 for postgraduate loans. Deduction rates will remain at 9% and 6% respectively. This is an increase for students repaying against these plans, however given that the Augar review proposed a significant reduction in the thresholds and a longer write-off period, it could have been much worse news for repayers.

Advanced learner loans (loans for those studying whilst working) are treated as Plan 2 loans.

Multiple plans

As only one undergraduate loan can be deducted through the payroll at any one time, if a new starter indicates that they have more than one plan, i.e. a combination of plans 1, 2 and 4, which is increasingly likely, you are required to default the plan that is set up in the payroll to the one with the lowest threshold for the tax year concerned. This means that the following table should be applied for 2022/23.

Plan selected	Plan type
P45 ticked but no starter checklist supplied	1
Plans 1 and 2 selected	1
Plans 1, 2 and 4 selected	1
Plans 2 and 4 selected	4