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Umbrella Company Employees: How your Student Loan Affects Your Pay

Umbrella Company

If you’ve used a student loan to fund further education, you can expect repayments to start when you join the workforce and start earning more than a certain amount. Contractors who are employed by an umbrella company will make repayments through the PAYE system, just like traditional employees. Your repayments will be based on the amount you earn, rather than the amount you owe.

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Deductions for your student loan repayments will show up on your payslip, along with PAYE tax, Employee National Insurance and other compulsory deductions.

How your umbrella company knows you have a student loan

Your umbrella company will be informed about your student loan in one of three ways.

  • The “continue student loan” box was checked on your P45 from your previous employer
  • You indicate that you have a student loan on your starter checklist (formerly known as a P46)
  • HMRC automatically send notification to your umbrella company when new employment is notified.

As your employer, your umbrella company does not decide if repayments are due, or how much you repay, they are simply required to follow the rules. 

How much will you repay?

Student loan repayments are currently set at 9% of taxable pay over the appropriate threshold. The threshold depends on which repayment plan you fall into:


Plan 1

Plan 2


All Scottish and Northern Irish students.

English and Welsh students who started university before 1/09/2012.

English and Welsh students who started university on or after 1/09/2012

Threshold (20/21)




You’re paid monthly and your income changes each month. This month your income was £2,000, which is over the Plan 1 monthly threshold of £1,615.

Your income was £385 over the threshold (£2,000 minus £1,615). You will pay back £34 (9% of £385) this month.

If you receive more than one payment in a tax week/month

The threshold is monthly or weekly, depending on your pay frequency (see the table above). If you’re paid more than once in a tax period, you’ll often repay more on the second payment, because the threshold for the week/month was already reached in the first payment.

Your first payment this tax month was £2,000 and you paid £34 as in the first example. You then received a further payment of £2,000 in the same tax month.

In total, your income is £2385 over the threshold (£4,000 – £1615). You will pay a total of £214 (9% of £2385). You have already paid £34 on the first payment, so you will repay £180 from your second payment.

It’s important to note that you’ll repay the same total amount as you would if you received a single payment of the same value.  

If you believe you’ve overpaid

You can ask for a refund from the Student Loan Company if:

  • You’ve paid more than the total you owe
  • Your annual income was below the threshold
  • You started making payments before you needed to

You can’t usually get a refund for extra repayments, so if you’ve simply repaid more than expected you may not be able to get any money back.

If you believe you’re due a refund, you’ll need to contact the Student Loan Company on 0300 100 0611. Lines are open Monday to Friday, 8:00 AM to 6:00 PM. 

If you have questions or if we can help in any way, please call our expert team on  01296 468483 or email

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