SL1 / PGL1 Notice & Tax Code Impact Calculator
An SL1, SL2 or PGL1 notice tells your employer to start, stop or change a student loan deduction. See exactly what it does to a payslip, using HMRC's 2026-27 rates and thresholds.
Your tax code does not contain your student loan
Myth: a tax code like "1257L SL" carries the student loan instruction.
Reality: a tax code sets your tax-free allowance and nothing else. Student loan deductions come from a separate SL1, SL2 or PGL1 notice, or from the student loan indicator on a P45[source].
Your code 1257L gives a tax-free allowance of £12,570 a year.
How the notice system works
HMRC sends SL1 (start) and SL2 (stop) notices for undergraduate loans, and PGL1 and PGL2 for Postgraduate Loans. Employers act from the next payroll run and never backdate through payroll.
Annual equivalent: £42,000
Tax-free pay this month: £1,047.50. The code changes the tax line, never the student loan line.
England, Wales and Northern Ireland rates apply.
No deductions are being made; HMRC issues an SL1 telling the employer to start.
The tax year runs 6 April to 5 April, so tax month 1 is April. June leaves 10 months of the 2026-27 tax year.
Outcome: repaid in full
£94 a month less take-home
From June, £94 a month goes to your student loan and net pay falls from £2,813.34 to £2,719.34. It is a repayment of your own balance, not a tax.
Over the 10 months left in the 2026-27 tax year that is £940 off your balance.
SL1 notice: the payslip before and after
Student loan, before
£0
Per month
Student loan, after
£94
Per month
Change in take-home
−£94.00
Per month
Rest of 2026-27
−£940.00
10 months from June
How this is worked out
(£3,500 − £2,448) × 9% = £94
HMRC's monthly threshold for 2026-27, rounded down to a whole pound as payroll must. The published monthly figure is floored, not the annual threshold divided by twelve[source].
How this is worked out
£94.00 × 10 = £940.00
£94.00 a month less take-home, effective from tax month 3 (June), which leaves 10 of the 12 tax months. Tax month 1 is April, not January.
| Payslip line | Before | After | Change |
|---|---|---|---|
| Gross pay | £3,500 | £3,500 | — |
| Income tax | £490.50 | £490.50 | — |
| National Insurance | £196.16 | £196.16 | — |
| Student loan | £0 | £94 | £94 |
| Postgraduate loan | £0 | £0 | — |
| Net pay | £2,813.34 | £2,719.34 | −£94.00 |
Income tax and National Insurance are unchanged by any student loan notice: a SL1 touches only the loan line.
What happens, in order
- 1No student loan deductions are being taken today
- 2HMRC issues an SL1 naming the plan type
- 3The employer starts deducting from the next payroll run
- 4Earlier months are not clawed back through payroll
What the employer has to do
- • Check the notice for the effective date and the plan type
- • Update the payroll record with the plan or Postgraduate Loan flag
- • Apply it from the first payday on or after the effective date
- • Never backdate deductions through payroll, and never refund them through payroll
- • Keep the notice on file, and tell the employee their net pay will change
Rates, assumptions and sources
Every figure below is the 2026-27 published figure, read from this site's single source of truth at page-render time[source]. The 6% Plan 2 and Postgraduate interest cap covers the 2026/27 year only and is not assumed to continue[source].
| Plan | Threshold | Rate | Interest | Written off | Threshold freeze |
|---|---|---|---|---|---|
| Plan 1 | £26,900[source] | 9% | 4.1%[source] | 25 years[source] | Uprated annually — no freeze announced |
| Plan 2 | £29,385[source] | 9% | 4.1% to 7.1% by income, capped at 6% for 2026-27[source] | 30 years[source] | Frozen at £29,385 until April 2030 |
Write-off is counted from the April after the course ends, not from the course-end date itself, and the Plan 2 interest bands (£29,385 lower, £52,885 upper) are frozen alongside the Plan 2 repayment threshold.
This calculator also assumes
- Tax year
- 2026-27
- Pay frequency
- Monthly (12 tax months, month 1 = April)
- Notice effective from
- June (tax month 3)
- Income tax basis
- This month alone (Month 1 basis)
- Tax code
- 1257L
- Income tax rates
- England, Wales and Northern Ireland
- Loan deduction rounding
- Rounded down to a whole pound
- Not modelled
- Cumulative tax adjustments, salary sacrifice, K codes
Growth, inflation and long-run interest figures are assumptions, not published rates. Change them and the projection changes.
Notices, tax codes and common mistakes
What each notice means
- • SL1 — start deducting an undergraduate loan, plan named on the notice
- • SL2 — stop deducting the undergraduate loan
- • PGL1 — start deducting a Postgraduate Loan as well
- • PGL2 — stop deducting the Postgraduate Loan
- • A P45 can also carry a student loan indicator, which the new employer follows
Mistakes that cost money
- • Deducting under the wrong plan — the thresholds differ by thousands
- • Carrying on after the loan is repaid, which is what SL2 exists to stop
- • Treating a Postgraduate Loan as replacing the undergraduate one; they stack
- • Looking for a student loan flag in the tax code, where it never is
- • Waiting for payroll to refund an over-deduction; only the SLC can
Thresholds on the notice, 2026-27
| Plan | Monthly | Weekly | Rate |
|---|---|---|---|
| Plan 1 | £2,241 | £517 | 9% |
| Plan 2 | £2,448 | £565 | 9% |
| Plan 4 (Scotland) | £2,816 | £649 | 9% |
| Plan 5 | £2,083 | £480 | 9% |
| Postgraduate Loan | £1,750 | £403 | 6% |
Every figure read from this site's published data at render time[source].
If a notice landed after a bonus month and the figures look strange, the bonus & variable pay calculator explains the spike. To check a finished year against your P60, use the P60 and P45 reconciliation calculator.
Related student loan calculators
The SL1/SL2 notice and tax code simulator answers one specific question. For the full picture, start with our UK student loan calculator on the homepage, work out what leaves your payslip each month with the monthly repayment calculator, or check what you can borrow with the student finance calculator. Every tool on the site is listed in the UK student loan calculator directory.
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