Why have Student Load Co/Erudio dropped the deferment level threshold by so much?

Tunstallstoven

Hi all

I have been deferring since I graduated in 1998. I was moved to Erudio last year.

Two years ago the deferment level was at £2318. Last year it was £2398. This year it is £2227!

Does anyone know why, or at least how they are explaining it?

Cheers

Max

Ed-1

Seagull27 wrote: »

Hi all

I have been deferring since I graduated in 1998. I was moved to Erudio last year.

Two years ago the deferment level was at £2318. Last year it was £2398. This year it is £2227!

Does anyone know why, or at least how they are explaining it?

Cheers

Max

See https://www.whatdotheyknow.com/request/224604/response/557497/attach/5/FOI2014%2018128%20Disclosure%20documents.pdf

Essentially, the additional rate tax cut from 50% to 45% in April 2013 distorted the April 2013 earnings figures (as workers delayed pay to take advantage of the cut), making them unusually high. The knock on effect of this is that when compared to April 2012 (for the 2013/14 deferment threshold) the percentage change is skewed to the upside (3.85%) resulting in a disproportionately higher threshold last year but when compared to April 2014 (for this year's 2014/15 deferment threshold) the percentage change is skewed to the downside (-1.65%) resulting in a disproportionately lower threshold this year. This can be easily seen by comparing the January 2014 projected earnings figure of £33853 which was much higher than the actual April 2014 earnings figure of £32370.

Now that the April 2013 tax cut has fallen out of the calculations this 'threshold turbulence' should vanish considerably and I'd expect next year's threshold to come out closer to the figure in the previous years at £27500+.