Maternity Pay and Student Loans Explained
Taking maternity leave is financially complex. Your income drops significantly, yet your student loan deductions might not stop immediately.
✅⚡ Quick Answer
Your student loan repayments are based on your actual earnings each month, not your normal annual salary.
High Pay Period
During the first 6 weeks (90% pay) or if you get "Enhanced Maternity Pay," you will likely continue making repayments.
Low Pay Period
During the flat-rate SMP period (approx £184/week), your income usually drops below the threshold, meaning repayments stop automatically.
The Trap
Because repayments are calculated monthly, you might overpay relative to your annual income. You can claim this back at the end of the tax year.
SMP Rate
£184/week
2024/25 rate
Duration
39 paid weeks
6 Weeks 90% Pay; 33 Weeks SMP (approx £184/week)
Plan 2 Threshold
£2,372/month
2025/26
Plan 5 Threshold
£2,083/month
2025/26
Maternity Pay and Student Loans Explained
Taking maternity leave is financially complex. Your income drops significantly, yet your student loan deductions might not stop immediately.
The confusion stems from how the UK tax system (PAYE) works. It treats every month individually and it does not know you are about to take a year off. If your pay in a single month is high enough, a deduction is taken even if your annual income for the year is very low.
How your loan is treated depends on which type of pay you receive.
Statutory Maternity Pay (SMP)
SMP Rate
£184.03/week
2024/25
Duration
39 weeks
6 wks 90% pay
Typical monthly
~£800
approx
Statutory Maternity Pay (SMP) is the standard payment most employed mothers receive during maternity leave. To be eligible you must usually have been employed for at least 26 consecutive weeks and meet the average earnings threshold.
- Weeks 1–6: Paid at 90% of average weekly pay. If this amount pushes your monthly income above the plan threshold you will pay student loan in that month.
- Weeks 7–39: Paid at the statutory flat rate (~£184/week, ~£800/month). This is usually below the monthly threshold, so repayments often stop during this period.
- Weeks 40–52: Unpaid leave (protected employment rights apply).
ℹ️Quick note: Monthly threshold trap
PAYE and student loan deductions are calculated monthly, if a single month's earnings exceed the monthly threshold, a deduction happens even if your overall yearly earnings remain below the annual threshold. You may be due a refund after the tax year ends.
📝 Example: SMP and repayments
Case: Beth earns £35k/year. She takes 9 months leave with SMP after 6 weeks of 90% pay.
Net effect: repayments stop once SMP becomes the primary income, you may overpay earlier in the tax year.
2. Enhanced Maternity Pay
Some companies offer full pay for 3–6 months. Because this is taxable income, student loan deductions continue as normal during this period.
3. Maternity Allowance
If you are self-employed or don’t qualify for SMP, you get Maternity Allowance. This is non-taxable benefit income and does not count towards student loan repayments.
How Your Repayments Change
ℹ️The Monthly Threshold Trap
This is the most important thing to understand. You might pay student loan contributions even if your total income for the year is under the annual threshold.
Why? Student Finance is deducted monthly. If your pay in a single month exceeds the monthly threshold a deduction will be taken even if your total annual income ends up below the annual threshold.
This means your repayments automatically adjust each month based on what you're actually paid:
| Stage | Typical Pay | Student Loan |
|---|---|---|
| Working normally | Full salary | Full repayments |
| First 6 weeks maternity | 90% of salary | Slightly reduced (if still above threshold) |
| Weeks 7-39 (SMP only) | ~£800/month | Usually £0 (below threshold) |
| Extended unpaid leave | £0 | £0 |
| Return to work | Full salary (or part-time) | Repayments resume automatically |
Examples
- Example: You earn £3,000 in April (Month 1). The system takes a student loan deduction.
- Example: You go on maternity leave in May (Month 2) and earn only £800. The system takes £0.
- At the end of the year, your total income might be lower than the annual threshold (£28,470 for Plan 2), which means you should not have paid the April deduction and have therefore overpaid.
| Scenario | Annual Income | Repayment Status |
|---|---|---|
| Working full year | Above Threshold | Correctly Deducted |
| Maternity (Part year) | Below Annual Threshold | Likely Overpaid (Refund Due) |
2025/26 Worked Examples (Plan 2)
📝 The Standard Scenario (SMP Only)
Emma earns £35,000 (£2,916/month) and takes 9 months leave with statutory pay only.
Repayments stop almost immediately once she moves to the flat-rate SMP period.
📝 The Enhanced Pay Scenario
Sarah earns £50,000 (£4,166/month) and gets 6 months full pay while on leave.
She continues to pay ~£161/month for the first 6 months and then £0, in total she pays nearly £1,000 while on leave.
📝 The Refund Scenario
Lisa works April–August earning £2,500/month, then goes on maternity leave.
Because Lisa's total income for the year is below the annual threshold (£28,470), her £55 of repayments are refundable, she can claim this back from HMRC/SLC.
How to Claim Your Refund
If you took maternity leave part-way through a tax year, you likely overpaid. You cannot claim this immediately, you must wait until the tax year ends (5 April).
How to claim a refund
Wait for your P60 from your employer (usually arrives in May)
Check your "Total Pay for Year" and "Total Student Loan Deductions"
If your total pay is under the Annual Threshold (£28,470 for Plan 2), you likely overpaid
Call the Student Loans Company on 0300 100 0611 or contact HMRC and say: "I have overpaid due to fluctuating income from maternity leave."
They will check your record and refund any overpayment to your bank account
Other Scenarios
👨👩👧Shared Parental Leave
💜Adoption Leave
👶👶Multiple Children
💼Self-Employed Parents
What Happens to Interest?
💡Interest Keeps Accruing
While your repayments may stop or reduce during maternity leave, interest continues to accrue on your loan. Check our interest rates guide for current rates.
However, for most borrowers this doesn't matter because:
- If you wouldn't have repaid in full anyway, extra interest just adds to the amount written off
- The cash you keep during maternity leave is valuable for immediate needs and emergencies
- Typically, your total lifetime repayments are determined by earnings, not the balance, unless you are scheduled to pay it off.
Planning Tips for New Parents
Before Maternity Leave
Check your employer's enhanced maternity pay policy, this affects your repayments
Review your current student loan balance and repayment projections
Consider making pension contributions via salary sacrifice before leave (reduces NI too)
Update your budget to account for reduced income and loan repayments
During Maternity Leave
Check your payslips to ensure deductions are calculated correctly
Don't make voluntary overpayments when cash is tight, focus on savings
Keep KIT (Keeping in Touch) days in mind, earnings on these days count towards threshold
Plan for the transition back to work (full-time vs part-time)
Keeping in Touch (KIT) Days
You can work up to 10 KIT days during maternity leave without affecting your SMP. However, your earnings on these days do count for student loan purposes.
ℹ️Example
If you earn £200 for a KIT day and receive £600 SMP in the same month (total £800), you're still below the threshold and won't have student loan deducted. But if KIT earnings push you over £2,372/month (Plan 2), you'll pay 9% on the excess.
Plan Your Maternity Leave
Use our calculators to see how your student loan repayments will change during and after maternity leave.
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Current thresholds for all loan plans
Learn more →How Student Loans Work
Complete guide to UK student loan system
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