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bushblairandbrown

Salary After Tax 2016/7

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Here is a plot showing take home salary against salary for this new tax year.

I have included three cases: no student loan, plan 1 loan, plan 2 loan.

income.PNG

Numbers taken from http://www.listentotaxman.com/

The points I want to make are as follows:

  • Despite talk about the high 40% tax rate, take home pay is near-enough linear (how progressive...)
  • Plan 1 loan is slightly less take home than Plan 2 but bear in mind Plan 2 loans have higher than inflation interest rates so are almost perfectly a 9% graduate tax on salary over £21k. Plan 1 has sub-inflation rate (or should do but I think GO has interfered) so is slightly more favorable in that sense.
  • The rule of thumb for salary with student loan is 53% + £6k, and without salary is £62% + £4.5k.

post-40589-0-36113900-1459686700_thumb.png

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