Martin Lewis: Five things all new English university starters should know

Former_MSE_Eesha

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.

Read Martin Lewis: Five things all new English university starters should know Blog.

bluewren5090

About :

Martin Lewis: Five things all new English university starters should know

I get a bit confused here, but...

In point 3: "Instead, in practice what happens is you effectively pay an extra 9% tax on your income (not including national insurance) for 40 years."

If you are only paying back 9% of your income above 25,000, rather than 9% from the top of your tax threshold, is the effective rate a bit less than 9%?

la531983

Are you on about this article?

https://www.moneysavingexpert.com/students/student-loans-england-plan-5/

So if you earn £26,000 a year a an example, 9% of the bit over the threshold (£1,000) is £90, as per the example on that page. Are you overthinking this?

Income tax banding are irrelevant. 

bluewren5090

I followed 'More V' to Martins Blog, then the 1st item.

That has the title: "Martin Lewis: Five things all new English university starters should know"

I agree completely with how you arrive at 90 for the 9% of 1,000.

The text in the blog is "Instead, in practice what happens is you effectively pay an extra 9% tax on your income".

When my income is 26,000 then 13,250 is above the 12,750 threshold.

If I am to pay "an extra 9% tax on [my] income" then 9% of 13,250 is 1,192.50.

It seems to me that the effective extra tax rate is less than 9% on my income.