Parents income - something to think about

Prothet_of_Doom

Lets say your child is about to head off to the sort of university where they give out bursarys if you are on a low income, but you have an unexpected pay rise, which costs the child more than you'll get after tax.

Why not put a bit more into your pension, thus reducing your taxable income ? :T

Voyager2002

Prothet_of_Doom wrote: »

Lets say your child is about to head off to the sort of university where they give out bursarys if you are on a low income, but you have an unexpected pay rise, which costs the child more than you'll get after tax.

Why not put a bit more into your pension, thus reducing your taxable income ? :T

It is always sensible to put money that you don't need into your pension plan. Note that student awards are normally based on your income in the previous year, so your little wheeze is unlikely to make any difference.

Prothet_of_Doom

Voyager2002 wrote: »

It is always sensible to put money that you don't need into your pension plan. Note that student awards are normally based on your income in the previous year, so your little wheeze is unlikely to make any difference.

You think?

When you fill in the information required for the student loans it is based on the previous year, but IF it is significantly different you can phone them, and give them current year information. Later on they may ask for more proof.

So in my Son's case it made £4500 diiferrence when I put £2200 more into my pension.

Voyager2002

Prothet_of_Doom wrote: »

You think?

When you fill in the information required for the student loans it is based on the previous year, but IF it is significantly different you can phone them, and give them current year information. Later on they may ask for more proof.

So in my Son's case it made £4500 diiferrence when I put £2200 more into my pension.

That is correct: if this year's income differs from the previous year's by 15 per cent or more than you can apply for "current year assessment". I had (naively) assumed that the extra money involved would not amount to as much as a 15 per cent increase.

Noctu

Indeed, or if you're still saddled with a mortgage you could make a few swift overpayments!

devildog

Noctu wrote: »

Indeed, or if you're still saddled with a mortgage you could make a few swift overpayments!

Unless things have changed this past year it doesn't make any odds what so ever how much you are paying into/off of your mortgage

Prothet_of_Doom

I was lucky enough to pay off my remaining small mortgage, due to an inherritance, hence being about to do this, but I also looked at whether I could reduce my monthly payments by extending the length of my mortgage, which would allow payment into pension, and whether the extra grants and bursaries, would cover the additional interest. (I ignored the fact that I'd also be better off in retirement).

All I'm suggesting is, if you can reduce your taxable income, by careful adjustments, and still afford to live, it might reduce the amount of student debt that your kids end up with.

On the flip side, if said student, were to go into a career, where they set up a ltd company, they might be able to spend 30 years building up the business, but only drawing a small salary, and they wouldn't have to pay any loan back at all.