Starting April 2026, most benefits in kind (BIKs) must be processed through payroll and included on monthly payslips. This change could significantly impact how your student loan repayments are calculated.
Understanding the Changes
The mandatory payrolling of BIKs will roll out in phases beginning April 2026. This shift affects how HMRC calculates student loan repayments for those filing self assessment returns.
- How Student Loan Repayments Work
- The Self Assessment Impact
- Multiple Employment Considerations
- Strategic Considerations
How Student Loan Repayments Work
Your student loan repayment obligations depend on your loan type and when you started your course. Many borrowers will never fully repay their loans—or may not need to repay anything at all—if their earnings stay below the repayment threshold throughout the loan’s lifetime.
The Self Assessment Impact
HMRC determines repayment requirements by examining the total income declared on your self assessment tax return (SATR). A crucial change took effect in 2024-25: a new box was added to the SATR for reporting payrolled BIKs subject only to Class 1A National Insurance contributions.
This separation matters because student loan repayments aren’t required on these specific BIKs. If you include payrolled BIKs in your total PAYE income figure, the system will calculate repayments that are higher than necessary.
Multiple Employment Considerations
Here’s where the system creates an important distinction:
Under PAYE only: If you have multiple jobs and each pays below the repayment threshold, your earnings won’t be combined for student loan calculations.
Under self assessment: All your PAYE income from different employments gets added together, potentially triggering student loan repayments even when individual jobs pay below the threshold.
Strategic Considerations
Staying out of the self assessment system could save you money on unnecessary student loan repayments. This is particularly valuable if you don’t expect to earn enough from any single income source to fully repay your loan before it expires.
Several recent updates may help you avoid self-assessment altogether:
- The income reporting threshold increased from £1,000 to £3,000
- You can now pay the high-income child benefit charge through PAYE instead of self assessment
These changes mean many taxpayers no longer need to file self assessment returns.
Support From Digital Tax Matters
The upcoming mandatory payrolling of benefits in kind from April 2026 introduces new complexities around student loan repayments, particularly for those in the self assessment system. As we’ve covered, understanding how payrolled BIKs are reported, managing multiple employments strategically, and taking advantage of recent threshold changes can potentially save you from unnecessary student loan repayments.
These tax regulations require careful navigation to ensure you’re not overpaying on your student loans while remaining compliant with HMRC requirements. Our expert accountants at Digital Tax Matters can help you assess your specific circumstances, determine whether you need to file self assessment returns, and develop strategies to minimize your student loan repayment obligations.
Get in touch with Digital Tax Matters for professional guidance tailored to your situation and ensure you’re making the most tax-efficient decisions for your future.