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

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


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  • bluewren5090
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    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
    la531983 Posts: 1,908 Forumite
    First Post Name Dropper
    edited 8 September 2023 at 1:21PM
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    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
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    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.


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