Bonuses and Overtime: The "Month 1" Trap
Why did I pay student loan on my bonus when I earn less than the threshold?
One of the most common complaints to payroll departments is: "My annual salary is £25,000 (below the threshold), but you deducted student loan this month because of my bonus." This is legally correct.
Calculated Per Pay Period, Not Annually
Unlike Income Tax, which is cumulative (looking at your total earnings for the year so far), Student Loan deductions are calculated strictly on a pay period basis.
The Plan 2 Monthly Threshold (2026 approx): ~£2,448/month.
Example Scenario
- Month 1 (Normal): You earn £2,000. This is below the threshold. Deduction: £0.
- Month 2 (Bonus): You earn £2,000 + £1,000 Bonus = £3,000.
- Calculation: £3,000 - £2,448 (Threshold) = £552 excess.
- Deduction: 9% of £552 = £49.68.
Can I get a refund?
Yes, but only if... your total annual income at the end of the tax year (April 5th) is still below the annual threshold (e.g., £29,385 for Plan 2).
If your bonus pushed your total annual pay above the annual threshold, you cannot claim a refund, even if you only paid in one specific month.