New tuition fees - Govt will rinse us after graduating uni?
I was just reading the moneysavingexpert website about new tuition fee repayments and there is a section that includes tax and NI contribions which shocked me!
Annual earnings up to £7,475 =No tax – as this is the typical 'personal allowance' the amount earnable before income tax starts.
Earnings over £7,475 up to £21,000 = 32% tax and national insurance
Earnings above £21,000 =41% due to addition of student loan repayments
Earnings above £42,475 =51% due to addition of higher rate tax, but drop in national insurance (2)
Earnings above £150,000 =61% due to higher rate tax (2)
So say we earned 30,000 a year.
21,000-7,475 =13525 x 0.32 = 4328
30,000 - 21000 = 9000 x 0.41 = 3690
4328 + 3690 = £8018 paid to the govt in one year
therefore £30,000 hard earned salary is reduced to £21,982. ridiculous?
It gets even worse when you calculate it with a £40,000 salary!
Annual earnings up to £7,475 =No tax – as this is the typical 'personal allowance' the amount earnable before income tax starts.
Earnings over £7,475 up to £21,000 = 32% tax and national insurance
Earnings above £21,000 =41% due to addition of student loan repayments
Earnings above £42,475 =51% due to addition of higher rate tax, but drop in national insurance (2)
Earnings above £150,000 =61% due to higher rate tax (2)
So say we earned 30,000 a year.
21,000-7,475 =13525 x 0.32 = 4328
30,000 - 21000 = 9000 x 0.41 = 3690
4328 + 3690 = £8018 paid to the govt in one year
therefore £30,000 hard earned salary is reduced to £21,982. ridiculous?
It gets even worse when you calculate it with a £40,000 salary!
Taking your example with someone earning £30000, you'll be repaying £810 per year for your tuition fees under the new student loans system. That only equates to an extra 2.7% of your salary, not really that much to be honest compared to the overall tax rate.
Also you pay less per year than the old fees - for someone earning £30000 you'll pay £1350 per year if you have one of the old student loans!
Obviously you have to pay the new fees for longer than the old fees and it will work out more expensive for most people, but the new repayment scheme is overall pretty generous and ensures your take-home salary is greater at the start of your career. And most importantly it allows everyone to go to uni and not have a massive debt burden hanging on top of you like you do with loans in other countries such as America.
Also you pay less per year than the old fees - for someone earning £30000 you'll pay £1350 per year if you have one of the old student loans!
Obviously you have to pay the new fees for longer than the old fees and it will work out more expensive for most people, but the new repayment scheme is overall pretty generous and ensures your take-home salary is greater at the start of your career. And most importantly it allows everyone to go to uni and not have a massive debt burden hanging on top of you like you do with loans in other countries such as America.
Your calculations for earnings above £42475 aren't that acurate, seeing as you're taxed normal rate on earnings above the threshold up to £42475 and *then* taxed at a higher rate of the remainder of your salary above £42475 - ie, you don't pay the higher rate income tax on *all* earnings above £7475.
Original post by Shani
Your calculations for earnings above £42475 aren't that acurate, seeing as you're taxed normal rate on earnings above the threshold up to £42475 and *then* taxed at a higher rate of the remainder of your salary above £42475 - ie, you don't pay the higher rate income tax on *all* earnings above £7475.
I know thats what it says, salaries are taxed in stages.
http://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes
Don't think of it as the government stealing your money, but rather you donating it to a children's hospital and to ensure that those innocent children have the best healthcare the World can provide.
Seriously though in this country income tax is far to high in my opinion. To a flat tax we go!
Seriously though in this country income tax is far to high in my opinion. To a flat tax we go!
You don't have to be a graduate, the government of this country will fleece you for tax money whatever it is you do. That's why one of my major objectives when I've completed my masters is to look into PhD/Job opportunities in the US.
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