Employer Deducting the Wrong Student Loan Plan
How to identify the wrong plan code, fix it with HMRC, and claim back any overpayment
Key Takeaways
- Your employer deducts based on the plan code HMRC sends them via the SL1 start notice. If HMRC sends the wrong code, your employer will deduct at the wrong threshold.
- Check your payslip plan code against your actual loan type: Plan 1 (pre-Sep 2012), Plan 2 (Sep 2012–Jul 2023), Plan 4 (Scotland), Plan 5 (Aug 2023+).
- Wrong plan codes typically mean you pay at the wrong threshold. Plan 1 threshold (£26,900) vs Plan 2 (£29,385) — the difference costs you hundreds per year if your income falls between them.
- Fix it by calling HMRC on 0300 200 3300. They update the plan code and send a corrected notice to your employer. Also tell your payroll department.
- Claim back overpayments from SLC on 0300 100 0611 with payslips showing incorrect deductions.
In this article
If your employer uses the wrong student loan plan code, you pay at the wrong repayment threshold. Depending on your income, this can cost you hundreds of pounds each year in unnecessary deductions. The good news is that plan code errors are fixable, and any overpayment is refundable.
This guide shows you how to identify a wrong plan code on your payslip, what the financial impact is, how to correct it through HMRC, and how to claim back anything you have overpaid. Check your plan type at the student loan plans overview.
How Wrong Plans Happen
Your employer does not choose your repayment plan. HMRC tells them which plan to use via the SL1 start notice. If HMRC holds incorrect information about your loan type, the SL1 they send carries the wrong plan code and your employer deducts accordingly. Several things cause this.
Common causes of wrong plan codes
- HMRC sends the wrong SL1. If your loan type was recorded incorrectly when your employer registration was processed, the SL1 carries a wrong plan number from the start.
- P45 from a previous employer carries the wrong code. When you change jobs, your P45 may show an outdated or incorrect plan. Your new employer enters this into their payroll system and HMRC may inherit the error.
- Payroll system migration errors. If your employer switches payroll software, student loan plan codes are sometimes incorrectly mapped during the data transfer.
- Confusion between undergraduate and postgraduate loans. If you have both a Plan 2 undergraduate loan and a Postgraduate Loan, your employer must deduct for both separately. Errors in distinguishing them are common.
- Manual data entry mistakes. Some smaller employers manually enter PAYE codes. A transposed digit or misread SL1 produces the wrong plan.
Read our guide on how student loan codes appear on your payslip to understand what each code means and where to find it.
Identify the Wrong Plan
Start with your payslip. Look in the deductions section for a line labelled “Student Loan”, “SL Deduction”, or similar. Some payslips state the plan explicitly, such as “Student Loan Plan 1”. Then compare this against your actual loan type using the table below.
| Plan | Who it applies to | 2025/26 threshold | Started |
|---|---|---|---|
| Plan 1 | England/Wales students who started before Sep 2012; Scottish/NI students before Sep 1998 | £26,900 | Pre-2012 |
| Plan 2 | England/Wales students who started Sep 2012–Jul 2023 | £29,385 | Sep 2012 |
| Plan 4 | Scottish students who started Sep 1998 onwards | £33,795 | Sep 1998 (Scotland) |
| Plan 5 | England students who started Aug 2023 onwards | £25,000 | Aug 2023 |
| Postgraduate | Masters/Doctoral Loan borrowers in England/Wales | £21,000 | Aug 2016 |
If the plan on your payslip does not match your loan type, you have a wrong plan code. Verify your loan type by logging in to the SLC repayment portal or by checking your original loan documentation. Full details for each plan are at the student loan plans page.
How to verify the deduction amount
Even if the plan label is missing from your payslip, you can check by calculating the expected deduction. Take your gross monthly salary, subtract the monthly equivalent of your plan threshold, then multiply by 9% (or 6% for Postgraduate). If the payslip figure differs significantly, the plan is likely wrong.
Financial Impact
The most common wrong-plan scenario is a Plan 2 borrower being deducted on Plan 1. The Plan 1 threshold is £2,485 lower per year than Plan 2 in 2026-27. If your income falls between £26,900 and £29,385, you pay 9% on income above £26,900 when you should pay nothing. The table below shows the overpayment at common salary levels.
| Annual salary | Correct plan (Plan 2) deduction | Wrong plan (Plan 1) deduction | Annual overpayment |
|---|---|---|---|
| £28,000 | £0 (below threshold) | £175 per year | £175 |
| £32,000 | £234 per year | £533 per year | £299 |
| £40,000 | £954 per year | £1,253 per year | £299 |
Cumulative impact over time
If the wrong plan code goes uncorrected for three years, an overpayment of £299 per year becomes nearly £900 before refund claims are factored in. Check your payslip plan code now, not at tax year end. See the repayment thresholds guide for all current plan thresholds.
The Plan 2 vs Plan 1 scenario is the most financially damaging for people earning between the two thresholds. However, a Plan 4 or Plan 5 borrower on the wrong plan faces similar problems. Any mismatch means you pay either too much or too little, and both outcomes need correcting.
How to Fix It
The fix must go through HMRC. Your employer cannot change your plan code on their own authority. HMRC must issue a corrected SL1 notice before your employer can act.
HMRC Helpline
0300 200 3300
Monday to Friday: 8am to 6pm
Ask for the student loan team. Have your National Insurance number, employer PAYE reference (from your payslip), and the correct plan type ready.
Step-by-step correction process
- Call HMRC on 0300 200 3300. Tell them your employer is using the wrong student loan plan code. State the incorrect plan they are using and the correct plan it should be.
- HMRC verifies your loan type from their records. If their records are wrong, you may need to provide your CRN so they can cross-reference with SLC data.
- HMRC issues a corrected SL1 notice to your employer. This typically takes 2 to 4 weeks to reach your employer's payroll system.
- Tell your payroll department that a corrected SL1 is on its way. Ask them to watch for it and update your plan code as soon as it arrives. This prevents a further month of wrong deductions while the notice sits unprocessed.
- Check your next payslip to confirm the plan code has changed and the deduction amount reflects your correct plan threshold.
Read our full guide on how to read student loan deductions on your payslip to confirm the correction has taken effect.
Claiming the Difference Back
Once the plan code is corrected, you need to recover any amounts you overpaid under the wrong plan. This is separate from fixing the code. SLC handles refunds; HMRC handles the code correction. You must contact both organisations.
If you overpaid under the wrong plan
Call SLC on 0300 100 0611. Tell them you have been deducted under the wrong plan and you need to claim back the difference. Provide payslips covering the period you were on the wrong plan. SLC calculates the difference between what you paid and what you should have paid, then refunds the shortfall directly to your bank account.
Allow 4 to 12 weeks for SLC to process the refund. The wider range reflects how far back the error goes. A three-month overpayment resolves faster than a two-year one. Keep all payslips from the affected period as evidence.
Gather your payslips first
SLC needs payslips showing the incorrect plan code and deduction amounts. Collect these before calling. If you use an online payroll portal, download and save them now. SLC may ask you to upload or email them as supporting evidence for your refund claim.
If you underpaid under the wrong plan
If the wrong plan code resulted in you paying less than you should have — for example, a Plan 1 borrower incorrectly put on Plan 2 — SLC may identify a shortfall. In practice, SLC does not routinely chase small historical underpayments through PAYE. Instead, your corrected plan will simply deduct at the right rate going forward. If SLC does raise a shortfall, they will contact you in writing. Do not pay anything unless you receive written confirmation from SLC.
Timeline summary
| Action | Who to contact | Expected timescale |
|---|---|---|
| Correct plan code | HMRC: 0300 200 3300 | 2–4 weeks for corrected SL1 |
| Claim overpayment refund | SLC: 0300 100 0611 | 4–12 weeks for refund |
| Confirm correction on payslip | Check next payslip | Next pay period after SL1 received |
Frequently Asked Questions
How do I know if my employer is using the wrong plan?
Check the plan code on your payslip and compare it to your actual loan type. Your loan type is shown in the SLC repayment portal at repayment.slc.co.uk. If the payslip shows Plan 1 but you started university after September 2012 in England or Wales, your employer is using the wrong plan. You can also detect a wrong plan by calculating your expected deduction at 9% above your correct threshold and comparing it to the payslip figure.
What is the financial impact of the wrong plan?
The impact depends on which plans are involved and your income. The most common error is a Plan 2 borrower on Plan 1, which costs up to £224 per year for incomes above £29,385. If your income falls between the Plan 1 threshold (£26,900) and the Plan 2 threshold (£29,385), you pay 9% on income above £26,900 when you should pay nothing. Over several years, this becomes a substantial overpayment.
How do I fix the wrong plan code?
Call HMRC on 0300 200 3300 and ask them to correct your student loan plan code. HMRC will issue a corrected SL1 notice to your employer. Also inform your payroll department so they can action the corrected notice promptly. The code change usually takes 2 to 4 weeks to appear on your payslip.
Can I get a refund for the overpayment?
Yes. Once the plan code is corrected, call SLC on 0300 100 0611 with payslips showing the incorrect deductions. SLC calculates the difference between what you paid and what you should have paid, and refunds the overpayment to your bank account. Allow 4 to 12 weeks depending on the size of the claim.
Why does my employer have the wrong plan code?
The most common causes are: HMRC sending a wrong SL1 start notice based on incorrect records, a P45 from a previous employer carrying an incorrect plan code, or a payroll system migration error. Your employer acts in good faith on the SL1 they receive from HMRC. The error originates upstream, so the fix must also come from HMRC.
Student Loan Calculator UK Editorial Team
Editorial Team
This page is maintained by the Student Loan Calculator UK editorial team, checked against GOV.UK and Student Loans Company guidance. Read more about our editorial approach.